According to recent analysis, Dogecoin's Market-Value-to-Realised-Value (MVRV) Z-Score stands at a mere 0.28, a figure typically indicative of market capitulation rather than exuberance. Despite this, Dogecoin, currently the ninth-largest cryptocurrency, is experiencing a series of upward price movements, hovering around $0.17 with a market capitalization of approximately $26 billion as of late Monday in New York. Analyst Kevin, operating under the pseudonym @Kev_Capital_TA, highlighted this disparity between the lackluster on-chain sentiment and the persistent demand in the market.
Kevin noted that while Dogecoin’s MVRV Score remains at bear-market levels, its price continues to make higher highs and higher lows on longer time frames. Historically, significant peaks in the Z-Score occurred at around 11 in 2017 and approximately 16 in 2021, while the current advance has only reached a peak of 3.5. He emphasized that Dogecoin has yet to experience a true bull run, attributing the slow performance of alternative cryptocurrencies to ongoing restrictive monetary policies. He remains optimistic that this situation will eventually change, allowing altcoins to flourish.
The restrictive monetary policy referenced by Kevin is a primary challenge facing the altcoin market. In the United States, the Federal Reserve has maintained its federal funds target rate between 4.25% and 4.50% since January, following three rate cuts in 2024. The futures market indicates that another reduction may occur around September or later, particularly after softer inflation data in May, yet the economy remains robust. Despite this, the Fed is continuing its quantitative tightening, reducing the monthly Treasury runoff cap, although Chair Jerome Powell has indicated that there are no immediate plans to end this tightening cycle.
In Europe, the European Central Bank (ECB) has begun to lower borrowing costs, recently cutting the deposit rate to 2%. However, President Christine Lagarde stated that the Governing Council is poised to proceed cautiously and will keep quantitative easing as an option without immediately reintroducing it. The ECB's Vice-President, Luis de Guindos, highlighted the lessons learned regarding the side effects of money printing, suggesting that the criteria for initiating new quantitative easing measures are now more stringent.
This combination of factors has led to a global environment where policy rates remain above neutral, liquidity is being withdrawn by the Fed, and European officials are cautious about repeating past bond-buying strategies. Kevin asserts that this delay in easy monetary conditions is a key reason why altcoins have underperformed compared to Bitcoin in the current 2024-25 cycle.
The MVRV metric compares the total market value of Dogecoin with its realized value, which reflects the price at which coins last moved on-chain. The Z-Score normalizes this ratio against its historical average. For Dogecoin, values above +9 have historically aligned with market peaks, while values between -1 and +1 have typically been seen during prolonged market stagnation. Currently, with an MVRV of 0.28, Dogecoin is positioned within the winter band, despite a fivefold increase from its 2022 lows.
The ongoing disparity is evident in the market dynamics: while Dogecoin's market cap has been on the rise since late 2023, the Z-Score remains near zero, indicating that average on-chain holders are not yet experiencing the profits that typically trigger market enthusiasm. Looking ahead, futures markets anticipate two quarter-point rate cuts by December, potentially bringing the Fed's policy rate to around 3.75%. However, both the Fed and the ECB have not signaled intentions for new asset purchases.
Kevin's insights suggest that Dogecoin could absorb new retail and leveraged inflows without immediately triggering overheating indicators, as the Z-Score has not significantly deviated from its mean. He cautions, however, that macroeconomic factors continue to play a crucial role. With the current low MVRV indicating limited downside potential, the possibility for substantial upside remains tied to a shift in global liquidity—a development that central banks have yet to initiate.
As of the latest update, Dogecoin is trading at $0.17387.
