THE Dogecoin open interest saw a massive crash over the past month, which has sparked concerns about the future prospects of the meme coin. It is now far from the historic highs of March and returned to the lowest levels of early February.
Dogecoin Open Interest Sees 66.5% Crash
In March, the Dogecoin Open Interest had reached a new all-time high of $1.91 billion after a month of steady increases. This was followed by an increase in DOGE Price as investors rushed to join the rally and lock in their gains. This steady growth would continue until the beginning of April, but since then the price has been on a downward trend.
Data from Coinglass watch that on April 1, Dogecoin’s total open interest stood at $1.87 billion. But within a week, open positions fell by $600 million. The decline continued until the end of April and at the end of the month the open position amounted to $763 million.
Source: Coinglass
The month of May following the downward trend of April, the drop in open positions was constant. At the time of writing, the Total Open Interest on Dogecoin stands at $625.7 million, a whopping 66.5% collapse from its $1.87 billion level just a month ago.
The last time Dogecoin open interest was this low was towards the end of February. However, open interest is still far from its lowest level in January, when it was below $300 million. At the same time, the DOGE Price is also higher, suggesting that the last few months have been pretty good for the meme coin.
How will DOGE price react?
The reaction to a sharp drop in open interest has always been the same, ending with a drop in the price of the cryptocurrency. Dogecoin has remained true to this trend as its price has fallen by almost 50% as bears continue to exert their dominance.
If the DOGE open interest continues to fall, so investors can expect the price to follow the same trajectory. Such a crash could send the Dogecoin Price below the $0.12 support, which could be the start of a downward spiral.
However, if open interest recovers, a price reversal is also expected. This will mainly depend on how the price of Bitcoin moves in the future, but as interest begins to grow and traders take more positions, it leaves room for Dogecoin to grow.
DOGE price jumps to $0.137 | Source: DOGEUSDT on Tradingview.com
Featured image from Corporate Finance Institute, chart from Tradingview.com
