Falling interest in Dogecoin has been a growing concern for investors, as data reveals a sharp decline in the cryptocurrency’s open interest since the beginning of March, hitting lows not seen since late 2024. Drawing upon data from CoinGlass, it becomes evident that the appetite for the ‘king of memecoins’ amongst traders and the number of leveraged positions have both witnessed significant reduction.
A Closer Look at Dogecoin’s Declining Open Interest
Open interest plays a pivotal role in gauging interest in a particular asset, thereby offering insights into potential price movements. Dogecoin’s open interest has been visibly in decline, suggesting a waning interest. Following a peak on January 18, the open interest trend for Dogecoin has been downward, a trend which has been mirrored in its pricing. From mid-January onward, Dogecoin’s open interest has been steadily diminishing, sliding from multi-month highs to a figure now likened to the periods prior to the Q4 price rally of last year.
CoinGlass’s data show the decline has not happened suddenly, but rather gradually over the preceding two months, characterized by an exodus of traders and a dilution of bullish sentiment in the derivatives market. This is further exemplified by the continuous fall in Dogecoin’s price alongside the entire crypto market. The current open interest for Dogecoin is hovering around $1.6 billion, a staggering 70.5% below its January 18 peak of $5.42 billion.
What the Declining Interest Means for Dogecoin’s Future Price
The ongoing slump in Dogecoin’s open interest carries implications for its future price direction, especially in terms of momentum and liquidity in the derivatives market.
Open interest is routinely used to gauge the intensity of a trend, either upward or downward, and sharp declines usually indicate traders exiting positions due to stop-losses triggers, liquidations, or waning faith in the asset’s near-term upside potential.
In theoretical terms, a decrease in Dogecoin’s open interest suggests a parallel reduction in liquidity, which could potentially derail any price uptrend. Contrarily, an increase in open interest indicates heightened liquidity. The return of open interest to its November 2024 levels suggests a significant erosion of liquidity and sentiment towards the memecoin, erasing around two months of progress. The speed at which derivatives traders can reignite bullish momentum is expected to play a critical role in any potential uptrend from this point.
Currently, Dogecoin is trading at about $0.1684, marking a 0.52% increase in the past 24 hours. However, the overriding trend continues to be negative, with the memecoin falling by 34% over the past 30 days. This extended period of decline has also affected Dogecoin’s standing in the wider market, leading to it ceding its position to Cardano in terms of market capitalization.
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