Recent surges in the Dogecoin market have less to do with spot demand and more with increased derivatives activity. According to Alphractal CEO Joao Wedson, while social media attention towards Dogecoin has diminished significantly, the rapid price increase is causing some to question the sustainability of the current trend.
Spot activity declines sharply
Data from Alphractal shows a steep decrease in both new users on the Dogecoin network and transaction volume. The number of active wallets fell to 37,197 in a single day, representing a 44.88 percent drop over the past week. Daily transaction numbers also slumped, reaching 26,189—a decrease of 51.27 percent over the same period. On-chain transfer volume totaled $118.12 million, down 41.25 percent in seven days.
Wedson points out that Dogecoin’s social media engagement has likewise declined. Interest from users tends to wane particularly when the broader bull market remains uncertain. Only a handful of altcoins are managing to retain meaningful attention on social media in these conditions.
Highlighting the plunge in Dogecoin-related posts, Joao Wedson explained on his social platform that “right now, only a few altcoins receive notable attention on social media; typically, engagement surges when a market rally is confirmed, but remains weak during uncertain periods.”
Derivatives drive short-term rally
As spot market activity fades, all eyes are on the booming derivatives segment. Open interest has surged to $1.099 billion, while the long-to-short ratio has climbed to 2.6433. This ratio suggests that leveraged traders are strongly betting on a price increase. Alphractal’s algorithm describes the current scenario as a “bullish regime with high risk appetite.”
However, this extreme optimism comes with significant risks. The high long-to-short ratio means even a small reversal could trigger a cascade of liquidations and accelerate selloffs. Alphractal’s analysis warns that “as leverage rises, so does directional uncertainty, making single-sided positions a vulnerability for the market.”
Valuation, supply, and key indicators
Despite the price rally, valuation metrics do not yet indicate that Dogecoin is overvalued. The MVRV ratio is at 0.686, and the asset currently trades below its realized price of $0.1383. Alphractal’s net unrealized profit/loss indicator stands at -0.459, placing Dogecoin in what it calls a “capitulation zone,” meaning most investors are holding losing positions. This suggests the price is closer to the end of a long decline or the start of a recovery rather than at a peak.
For momentum, the RSI indicator is neutral, while the MACD recently turned slightly positive. Although selling pressure has decreased, DOGE is still trading below its 200-day moving average, without a decisive breakout on the chart.
Supply dynamics also warrant attention. Over the past week, Dogecoin reserves on exchanges climbed by 8.45 percent to 27.19 billion coins, with a total market value of about $2.66 billion. This movement onto exchanges may indicate preparations for selling. Circulating supply remains at 153.95 billion DOGE.
As for activity between major holders and retail investors, only a weak balance has been observed. Alphractal’s analysis notes 4.54 percent growth in the last 12 months, which has introduced some light resistance from a long-term perspective. Overall market sentiment remains neutral.
