Dogecoin's Stock-to-Flow Ratio Hits All-Time High, Indicating Potential Price Rally Amid Increased Network Activity

Between August 18 and 19, Dogecoin (DOGE) experienced a remarkable increase in its stock-to-flow ratio. This change is significant for the meme coin, which has struggled to gain value recently.

As of now, DOGE is trading at $0.099. That's a 40% drop over the last 90 days. But here's the thing: the coin might be on the verge of a big price rally.

The stock-to-flow ratio is a way to measure how scarce a cryptocurrency is. If this ratio drops, it usually means there's high inflation around the coin, which can lead to a price decrease. According to Santiment, Dogecoin's stock-to-flow ratio has jumped to 69.25. That's an all-time high! This spike is a positive sign for DOGE's price, suggesting there could be a supply squeeze.

A supply squeeze happens when demand for a coin rises during a period of scarcity. So, based on this metric, DOGE's price might see a significant rally in the coming weeks.

Additionally, both active and new addresses on the Dogecoin network have increased since last week. Active addresses show how many users are completing transactions. This indicates more blockchain activity and a bullish outlook. If active addresses were to decline, that would signal a bearish trend.

New addresses represent users making their first transactions. Growth in this area suggests rising adoption and demand. A drop would indicate waning interest. So, the rise in active and new addresses for DOGE supports the idea that the coin's price could soon break out of its long-standing bearish trend.

To analyze Dogecoin's next move, BeInCrypto is looking at the Global In/Out of Money (GIOM) indicator. This tool shows whether addresses are in profit, at a loss, or breaking even based on their acquisition cost compared to the current price.

Addresses with a higher acquisition cost than the current price are considered out of the money. Those with a lower acquisition cost are in the money. The GIOM helps identify key support and resistance levels. More addresses in profit create support, while those at a loss contribute to resistance.

Right now, over 1 million addresses have purchased 11 billion DOGE at a maximum price of $0.098. This number is higher than those who accumulated DOGE between $0.12 and $0.15. If buying pressure increases, DOGE could break above the resistance around these points.

If that happens, the price might climb to $0.15, which would be about a 50% increase. But if DOGE fails to clear this resistance or faces rejection, that could undermine the bullish outlook. In that case, DOGE's price might drop to $0.088, indicating potential downside if momentum shifts.