Dogecoin (DOGE) Open Interest Declines as Price Holds Firm Above $0.10
The open interest for Dogecoin (DOGE) has seen a significant drop in recent weeks alongside the coin’s steady decline in price. Currently sitting at $2.51 billion, the total open interest for the meme coin is at its lowest point since the start of the year.
Open interest measures the number of outstanding options or futures contracts that have not yet been settled or closed. A decrease in open interest suggests a decrease in market activity and interest, as existing contracts are being closed without new ones being created. DOGE’s open interest has fallen by 80% since June 8, with the open interest previously reaching over $10 billion just a month ago.
The decline in open interest can be attributed to DOGE’s falling value during this period. Currently trading at $0.10, the cryptocurrency has experienced a 30% decline in the past month. This downward trend led to futures traders requesting short positions on July 6, as indicated by the negative funding rate (-0.026%) for DOGE on that day.
Funding rates are utilized in perpetual futures contracts to ensure that the contract price stays close to the spot price. A negative funding rate suggests that more traders are holding short positions, anticipating a decline in price rather than expecting it to rise.
Despite the decrease in DOGE’s value, the Chaikin Money Flow (CMF) indicator has shown an uptrend. With a current CMF reading above the zero line at 0.03, it suggests that there is bullish divergence between price and money flow. This implies that despite the falling price, there is considerable buying activity, potentially weakening selling pressure. If buying momentum continues, DOGE’s price may rise to $0.11.
However, if the divergence proves to be a false signal and selling pressure remains high, DOGE’s price could plummet to $0.08.