As the market continues to recover, open interest in major assets has been on the rise. However, Dogecoin seems to be an exception to this trend. The meme coin has shown little movement compared to other larger cryptocurrencies like Bitcoin and Solana. The direction of open interest can significantly impact Dogecoin’s price performance. So, what does this subdued open interest mean for the future price of the meme coin?
Dogecoin Open Interest Stagnates
According to data from the Coinglass website, the Dogecoin open interest has failed to reach the $500 million mark once again. On Thursday, the Dogecoin open interest stood at $493.97 million, far from its previous all-time high. Despite a 6.9% increase in open interest over a 24-hour period, significant jumps were observed on exchanges such as OKX and Bitget.
Despite this uptick, Dogecoin’s open interest remains well below its peak in August. The open interest surpassed $618 million at the beginning of August but has since plateaued, indicating that traders in the crypto space have shifted their focus elsewhere.
Moreover, the current open interest is more than 70% lower than the peak recorded in March 2024. On March 29, 2024, the Dogecoin open interest reached a new high of $2.21 billion. However, it has been on a downward trend since then. At the latest figure of $498 million, the DOGE open interest has experienced a 77% decline from its March levels.
Potential Benefits of Declining Open Interest for DOGE
Open interest represents the total number of open options or futures contracts in the market for a specific digital asset. It helps investors gauge whether traders are heavily speculating on the rise or fall of a cryptocurrency.
The current data on Dogecoin suggests that traders are not as focused on the meme coin as they were before. However, this might not necessarily be negative. Historically, periods of low open interest have signaled market bottoms. Low open interest periods often present good buying opportunities, as prices tend to decrease alongside open interest. As Bitcoin’s price continues to recover, it is anticipated that Dogecoin’s price will follow suit. When open interest starts to rise again, DOGE’s price is expected to experience significant growth.
A similar scenario occurred in January 2024, when open interest hit a bottom around $300 million. Over the following months, the open interest surged by over 630%, leading to a more than 100% price increase for Dogecoin.
If history repeats itself, DOGE’s price could potentially double once more. This would push the price above the $0.2 mark, especially with an anticipated bull run in the last quarter of the year.
Featured image created with Dall.E, chart from Tradingview.com