Dogecoin’s open interest has been on a large freefall for some time now because the memecoin continues to struggle to realize investor interest. Because it stands, data shows that Dogecoin’s open interest has sharply declined for the reason that starting of March, plunging to levels not seen since November 2024. The rapid drawdown, tracked using data from CoinGlass, reflects a major reduction in leveraged positions and trader appetite for the king of memecoins.

Three-Month Slide: Dogecoin Open Interest Drops Sharply

Open interest is crucial in measuring the interest in an asset, which in turn helps predict price movements. Within the case of Dogecoin, its open interest reflects a trend of low interest. After peaking on January 18, Dogecoin’s open interest has been on a relentless freefall, with price motion mirroring this downward trend. Since mid-January, Dogecoin’s open interest has been steadily evaporating, dropping from multi-month highs to a level now comparable to only before last yr’s Q4 price rally.

According to CoinGlass data, the reduction has not been abrupt but as an alternative drawn out over the course of the past two months, highlighted by a sustained exit by traders and a cooling of bullish sentiment within the derivatives market. That is sentiment relayed from a continued fall within the Dogecoin price alongside the remainder of the crypto market. On the time of writing, the Dogecoin open interest is sitting at $1.6 billion, 70.5% below its January 18 high peak of $5.42 billion.

Potential Implications For DOGE’s Future Price Movement

The persistent decline in Dogecoin’s open interest carries quite a few implications for its future price direction, particularly within the context of momentum and liquidity within the derivatives market.

Open interest is commonly used to evaluate the strength of a trend (whether upward or downward) and sharp reductions typically suggest that traders are pulling out of positions resulting from stop-loss triggers, liquidations, or they not see near-term upside within the asset. 

In theory, a decrease in Dogecoin’s open interest points to a corresponding reduction in liquidity, which also can damage any price uptrend. A rise in open interest, alternatively, is definitive of a rise in liquidity.

Now that the open interest has returned to its November 2024 levels, it means liquidity and sentiment surrounding the meme coin have lost about two months of labor, and the way quickly derivatives traders can return to bullish momentum may even be factored into any potential uptrend from here.

On the time of writing, Dogecoin is trading at $0.1684, up by 0.52% prior to now 24 hours. Nonetheless, the broader trend stays negative, with the meme coin down by 34% over the past 30 days. This prolonged drawdown has also had consequences for Dogecoin’s standing in the broader market, and it has now been overtaken by Cardano when it comes to market capitalization.

Featured image from DALL-E, chart from TradingView

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