On-chain data shows that Dogecoin (DOGE) is among the altcoins that have seen significant losses from investors over the last 6 months, which could support the coin rebound in price.

Dogecoin MVRV suggests DOGE may offer a buy window

In the recent fasting In topic X, on-chain analytics firm Santiment discussed how assets like Dogecoin and XRP (XRP) compare in terms of returns on investment for traders across different time frames.

The metric of interest here is the popular “Market Value to Realised Value” (MVRV), which tracks the ratio of the value that investors have for a given asset as a whole (i.e. market capitalisation) to the value they have invested in that asset (realised capitalisation).

When the metric is greater than 1, traders are currently in a state of pure unrealized profit. On the other hand, being below the cutoff means a loss prevails in the market.

Historically, whenever cryptocurrency investors made immense profits, the probability of a price peak was higher because in such conditions, the probability of a mass sell-off to take profits became high.

Similarly, asset price lows have occurred when most investors have suffered losses and sellers have reached a point of exhaustion.

Based on these facts, Santiment has developed an “Opportunity and Threat Zone Model” that reveals how MVRV medium-term releases deviate from the norm for various coins in the sector. Below is a chart of the model provided by the analytics firm.

The “Medium-Term” versions of MVRV are specifically aimed at investors who bought within the 30-day, 90-day, and 6-month time frames. When the divergence of these metrics is positive for an asset, it means that the coin may currently be undervalued. Similarly, a negative divergence suggests a potentially overvalued status.

From the chart, we can see that most of the altcoins are currently in a bullish zone, with some of them even seeing a divergence augment above level 1, which corresponds to the area that Santiment classifies as the “Opportunity Zone.”

According to analytics firm Dogecoin, Toncoin (TON) and Ethereum (ETH) recently recorded 6-month lows in MVRV, with traders who bought them in the last six months suffering losses of 32%, 23%, and 22%, respectively. Interestingly, in contrast to these assets, 6-month XRP traders recorded gains.

“As a trader, if you like to make profits, you WANT to be in assets where other traders are suffering and seeing losses,” Santiment notes. On that basis, Dogecoin may offer the best window among the top coins, while XRP may be the worst option.

DOGE price

At the time of writing, Dogecoin is trading at around $0.0975, down over 3% over the past week.

Featured image from Dall-E, Santiment.net, chart from TradingView.com