Dogecoin [DOGE] has recently been trading near $0.13, a critical support level that has historically acted as a key pivot for upward price movements. Since October 2023, DOGE has demonstrated consistent strength, bouncing off this level multiple times. As of now, Dogecoin is at a crossroads, with the potential for a breakout above this support zone, but also facing challenges in the form of weaker on-chain metrics.

Currently priced at $0.1446, DOGE has experienced a 4.90% decline in the past 24 hours. Despite the short-term fluctuations, the technical outlook is largely positive, with DOGE forming a bullish pennant pattern, a classic chart formation that often signals a reversal of the current trend. This pattern indicates that, if DOGE can break decisively above the pattern’s resistance, the price could target levels as high as $0.20 and possibly even $0.30.

The Significance of the $0.13 Support Level

The $0.13 level has become a crucial area for Dogecoin, particularly due to its alignment with the 61.8% Fibonacci retracement level, which adds a layer of technical strength to this support. Fibonacci retracement levels are commonly used by traders to determine potential reversal points in a trend. The fact that DOGE has repeatedly bounced from this area adds confidence that it could provide a solid foundation for further price increases.

If DOGE can maintain this support and break above the descending pennant pattern, it could signal a significant bullish reversal. A move beyond $0.20 would open up the path for even higher targets, possibly testing $0.30 in the near future. However, the ability to hold $0.13 is crucial for sustaining this rally.

Weak On-Chain Metrics: A Concern for Sustained Growth

Although Dogecoin’s technical setup appears promising, its on-chain activity remains concerning. At the time of writing, Dogecoin’s daily active addresses are hovering around 42,816, with a transaction count of only 20,793. These numbers indicate a lack of meaningful participation from retail traders, which could limit the strength of any potential breakout.

In particular, the low levels of user engagement are worrying because a strong rally typically requires increased activity on the blockchain. Without a significant boost in transactions and daily active addresses, Dogecoin may struggle to maintain upward momentum, and any breakout could quickly lose steam.

MVRV Ratio Signals Undervaluation

Despite these concerns, some indicators suggest that Dogecoin could be undervalued at its current price. The MVRV (Market Value to Realized Value) ratio for DOGE stands at 1.47%, meaning that most holders are near their breakeven point. This lack of selling pressure implies that there is limited interest in taking profits at this stage, which is often a positive sign for potential price increases.

Historically, such MVRV levels have been followed by upward price movements, suggesting that Dogecoin could be poised for a rally if other conditions align. However, a lack of accumulation from larger investors could limit the extent of any rally unless fresh interest emerges.

The Spike in Stock-to-Flow Ratio

One of the more optimistic signals for Dogecoin is its recent rise in the Stock-to-Flow (S2F) ratio, which has surged to 69.09, significantly higher than its previous range of around 29. The S2F ratio is used to assess the scarcity of an asset, and an increase in this ratio often correlates with rising prices. This jump suggests that Dogecoin may be experiencing renewed interest from long-term investors who are focusing on its scarcity as a potential driver of value.

A higher S2F ratio combined with a potential breakout could signal that Dogecoin is beginning to attract more attention from both retail and institutional investors. This, in turn, could fuel further price appreciation.

Conclusion: What’s Next for Dogecoin?

Dogecoin is currently positioned at a key support level, with a bullish technical structure forming on the charts. The $0.13 support zone, reinforced by the Fibonacci retracement level, remains crucial for any potential breakout. While on-chain metrics are weak, the rising Stock-to-Flow ratio and the absence of significant selling pressure could help fuel a rally.

However, for Dogecoin to sustain any upward momentum, stronger user engagement and a surge in on-chain activity are necessary. If DOGE can hold above $0.13 and break through the resistance formed by the pennant pattern, it could target $0.20 and $0.30 in the near future. The technical and fundamental factors are lining up, but traders should watch for a confirmation of increased participation and positive market sentiment before expecting a sustained rally.