Dogecoin’s Open Interest Plummets 70.5% Since January

Dogecoin’s open interest has been on a significant decline, reflecting a waning interest from investors. Data indicates that since the beginning of March, Dogecoin’s open interest has plummeted to levels last seen in November 2024. This sharp reduction in open interest, as tracked by CoinGlass, signifies a decrease in leveraged positions and trader enthusiasm for the memecoin.

Open interest is a key metric for gauging interest in an asset and predicting price movements. For Dogecoin, the declining open interest suggests a trend of diminishing interest. After reaching a peak on January 18, Dogecoin’s open interest has been in a steady decline, with price movements mirroring this downward trend. Since mid-January, Dogecoin’s open interest has dropped from multi-month highs to levels comparable to those just before the Q4 price rally of last year.

The reduction in open interest has been gradual over the past two months, marked by a sustained exit of traders and a cooling of bullish sentiment in the derivatives market. This sentiment is further reinforced by the continued fall in Dogecoin’s price alongside the broader crypto market. At the time of writing, Dogecoin’s open interest stands at $1.6 billion, a 70.5% decrease from its January 18 peak of $5.42 billion.

The persistent decline in Dogecoin’s open interest has several implications for its future price direction, particularly in terms of momentum and liquidity in the derivatives market. Open interest is often used to assess the strength of a trend, and sharp reductions typically indicate that traders are exiting positions due to stop-loss triggers, liquidations, or a lack of near-term upside in the asset.

In theory, a decrease in Dogecoin’s open interest suggests a corresponding reduction in liquidity, which can hinder any price uptrend. Conversely, an increase in open interest indicates an increase in liquidity. With the open interest returning to November 2024 levels, it suggests that liquidity and sentiment surrounding the meme coin have lost about two months of progress. The speed at which derivatives traders can regain bullish momentum will be crucial for any potential uptrend.

At the time of writing, Dogecoin is trading at $0.1684, up by 0.52% in the past 24 hours. However, the broader trend remains negative, with the meme coin down by 34% over the past 30 days. This extended drawdown has also affected Dogecoin’s standing in the wider market, as it has now been overtaken by Cardano in terms of market capitalization.