DOGE may become profitable again as it survives strong selling pressure
The profitability of the first cryptocurrency meme increased to nearly 60% as the coin managed to avoid bearish moves and successfully resisted selling pressure previously in the market, according to IntoTheBlock.
As the metric suggests, the profitability of Dogecoin currency stays at 58% as DOGE trades at approximately $0.14 and is facing a strong price increase in the last three days, gaining around 10% to its value.
According to the profitability measure, most DOGE holders are no longer at a loss unlike the March data. Only a month ago, the profitability of Dogecoin as an investment tool was around 40%, which is considered extremely low for such volatile assets as cryptocurrencies.
The spike in profitability also suggests that a major portion of the coins held by investors were purchased in the $0.15-$0.16 range.
Why is profitability important?
Apart from the obvious attractiveness of an asset, profitability is an important tool for traders and investors who aim to gauge the asset’s market conditions. Historically, assets with extremely high profitability above 90-95% face reversals because they are heavily overbought.
In contrast, assets with extremely low profitability, like Cardano, are oversold in the long term. Since holders of those assets are not likely to sell their holdings at a large loss, assets with low profitability are less likely to face strong selling pressure.
At press time, Dogecoin is trading at $0.14 and even above its 50-day moving average, showing that it still has a chance to break the long-term downtrend. The signal confirming the trend reversal would most likely be a breakout of the 200-day moving average.
