Disclaimer This is by no means a definite. I am making a lot of assumptions, some of which may be completely incorrect or illogical. In addition, there are a lot more variables to this that are next to impossible to predict so take it for what it is worth. Significant advancements in this coin/other coins, technical issues, new coins being introduced to the market, etc. are not being considered. This is going almost exclusively off of assumptions made on supply and demand. In addition, I will be focusing on the USD vs DOGE, as it is much more static than BTC or other coins so it is a more simple comparison. So I looked at several different factors that influence DOGE. I picked an arbitrary date of December 25 to begin my analysis, because this gave DOGE approximately 2 weeks to “stabilize” from its initial debut and honestly things were so hectic those first 2 weeks that I don’t know if I could really extract any viable information from it.
Here are my findings:
In the last 15 days, the value of DOGE has been on a steady decline in value. Specifically, it has went from around $0.0006/coin to $0.00025/coin. It has been a relatively linear decline.
However, deriving the numbers reveals that the rate of decline is slowing down, which is good.
In terms of volume, the difficulty has also been on a steady decline. This shows a decrease in the amount of people mining the coin, and is directly related to the value of the coin. Please note that a lot of the lost volume is from multipools who began switching to other coins that were more profitable. The difficulty we currently see is being driven closer to representing the volume of people mining the coin for speculation and optimistic future growth, and not those that are mining it to dump it via multipools or through self-initiation.
Now for the demand. This was difficult to predict since a lot of the difficulty was being driven by mine-and-dumpers, so I instead opted to look at growth in the social realm. While it is a bit crude, I am using this subreddit as a rough indicator of social growth. Whether or not this is accurate remains to be seen.
As indicated, growth of this reddit has slowed significantly. Extrapolated out this means that the growth of DOGE in a social aspect has slowed significantly. The rate of change per day compared to the first day of this analysis can be shown below:
“bla bla bla, tl:dr…what does this all mean?”
Several things, actually. One, that the initial value of DOGE was waaaaayyyy overinflated, and that this overinflation also inflated the volume of miners mining, and therefore the difficulty. Obviously since the difficulty and profitability are inversely related, they would essentially correct themselves until a happy medium was found.
”So what is that happy medium?”
According to my analysis, the rate of decline in value should soon be driven to zero which would have the value of DOGE stabilizing in approximately 3-5 days at a value of approximately $0.00012 to $0.00018.
“Oh, no! That’s horrible!”
It really isn’t! The important thing to remember here is that there are approximately 720 MILLION coins being mined per day. This is a huge influx of volume, yet the charts are already trending towards a stable bottom despite there being several more weeks of massive volume to go. In addition, it is already finding its bottom despite a constant decrease in the rate of “demand increase” (aka new shibes joining our trip to the moon).
“Ok, so what happens from there?”
That depends on a lot of things, most importantly whether we are able to recruit a lot of new people to the coin through word of mouth, cool apps, shopping, etc. Currently the rate we are attracting new people is lower than the rate of fall, which shows that the coin has built value beyond the perceived increase in people, which is promising.
To go further on this point, comparing the derivatives of increase in demand with the decrease in value show that the increase in demand is more significant by a FACTOR OF NEARLY 1.6. This is HUGE and shows that if we are able to increase the amount of people joining our shuttle to the moon, that it should pay huge dividends towards increasing the value.
So let’s assume we keep trending on the status quo, where the amount of people that jump on board follows the 2-week trend. I predict that we will still see a slight increase in value after we hit the bottom in a few days. Unfortunately, I don’t see much increase until block rewards are halved, assuming no major news is posted about DOGE or some crazy app comes out or store start accepting it (which I hope isn’t the case). At the rate we are declining in volume growth and considering how this influenced price up to this point, we will slowly trend back up into the $0.00020 to $0.00040 range until the coin becomes the most profitable to mine, at which point multipools when point their miners towards DOGE and drive up the difficulty and thereby the price will drop. This is going to continue until block rewards are halved next month.
IN CONCLUSION: I think we see the bottom soon, as in within the end of this week. I predict the bottom to be somewhere between $0.00012/coin and $0.00018/coin. From there I predict that we will see the value increase back up into the $0.00020 to $0.00040 range until it becomes the most profitable coin to mine, at which time multipools will mine DOGE, driving up the difficulty and driving down the price. This is going to continue until next month when block rewards halve. DOGE will then experience an instant increase in value then but how far up it will go will be directly dependent on how big we can make this community and how many feature we can make the coin be used for.
One other thing. For those that like to day-trade, want to make some easy money? Watch the value of DOGE closely in relation to the difficulty. Buy when the difficulty is low and the price is low and NO multipools are mining. Hold on until right before it becomes the most profitable coin to mine again and sell them all. Wait until multipools drive price down again and repeat.