Dogecoin open interest drops 24%
According to Coinglass, Dogecoin’s open interest has fallen 24% in the last week alone. This data is from July 18, when open interest reached $707 million, and by August, the total open interest was worth $420 million.
The decline in Dogecoin open interest came after the cryptocurrency market crash, which ultimately caused the price of Dogecoin to drop below $0.09 on Monday. This shows a significant decrease in the number of open interest, indicating a decrease in interest.
This is not the lowest level of Dogecoin open interest this year. However, it is interesting given the current market conditions. For example, the price of Dogecoin has erased most of its gains from last year, pushing it back to lows last seen in February 2024.
After the crash, the correlation between Dogecoin price and open interest became even more pronounced. During the time when open interest fell 24%, Dogecoin price fell about 40%.
What does the historical data show?
Since there is a correlation between open interest and Dogecoin price, using historical data can help narrow down the range of where Dogecoin could move in the future. For example, the last time Dogecoin open interest dropped significantly, the price also dropped.
In March 2024, DOGE open interest peaked at $2.21 billion, and the price also hit its highest level so far this year. Subsequently, open interest plummeted and DOGE price also fell from $0.22 to $0.18, all in March.
This suggests that an increase in open interest would be a good development if Dogecoin price is to start recovering. If open interest levels off from now on, then Dogecoin price could enter a consolidation phase and could hover around $0.08 for a while.
The main reason, though, is that if the price of Bitcoin starts to rise again, the price of Dogecoin will quickly pick up. In this case, a market-wide rally will drive Dogecoin higher, breaking the current bearish trend.
