Dogecoin supply squeeze suggests 50% potential price surge

Between August 18 and 19, Dogecoin (CRYPTO:DOGE) experienced a significant spike in its stock-to-flow ratio, indicating a possible supply squeeze and potential price rally. 

This shift is noteworthy for the meme coin, which has struggled to gain traction in recent months. 

Currently trading at $0.099, DOGE has seen a 40% decline over the past 90 days. 

However, recent data suggests the coin may be poised for a substantial price increase.

The stock-to-flow ratio is a market model that measures the scarcity of a cryptocurrency. 

A sudden jump in this ratio, as seen with Dogecoin, typically signals a supply squeeze, which can lead to a price rally when demand rises during a period of scarcity. 

According to Santiment, Dogecoin’s stock-to-flow ratio surged to 69.25, an all-time high, suggesting that DOGE may soon experience significant upward price momentum.

In addition to this metric, both active and new addresses on the Dogecoin network have increased over the past week. 

Active addresses represent users completing transactions, and a rise in this metric indicates growing blockchain usage, which is generally bullish. 

New addresses, which track participants making their first transaction, also suggest rising adoption and demand for DOGE.

The increase in these metrics reinforces the forecast that Dogecoin may soon break out of its prolonged bearish trend. 

Analyzing Dogecoin’s potential future price movements, the Global In/Out of Money (GIOM) indicator shows that over 1 million addresses purchased 11 billion DOGE at a maximum price of $0.098. 

This creates significant support around this price level.

If buying pressure continues, DOGE could break above the resistance between $0.12 and $0.15, potentially leading to a 50% price increase. 

However, if the coin fails to clear this resistance, DOGE’s price could drop to $0.088, presenting a downside risk if the bullish momentum fades.