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Dogecoin's open interest in futures contracts surged to a record high in early March. Although there was a slight pullback, open interest has since continued to remain at a very high level. Given this sustained high level, it may indicate the next price trend of meme coins based on historical data.
The open interest in Dogecoin futures contracts has remained high. Open interest is an indicator that measures the total number of futures or options contracts for a specific currency on the market at a given time. It helps to understand how much capital is flowing into that specific asset, revealing a high level of interest or favorability towards the asset.
For Dogecoin, as shown by Coinglass data, the total open interest in the past few months has been on the rise, especially with the recovery of the cryptocurrency market. A natural result of this trend is that the price has also been rising alongside open interest. Therefore, there is a high correlation between open interest and price.
On March 5th, Dogecoin's open interest reached a record high of $1.47 billion, and since then, this meme coin has not looked back. Despite a slight decline in the following days, the holdings have risen again, reaching $144 million on March 14th, with the price also rising.
Although the increase in open interest does indicate a bullish sentiment in the market, historical performance during such periods also needs to be approached with caution. Looking at what happened before Dogecoin's open interest hit a record high can give us an idea of the next price trend.
Where will Dogecoin go next?
Over the years, Dogecoin's open interest has reached historical highs at different times, and there has been a trend in a sense. Looking back at 2021, there were multiple times when open interest reached an all-time high, and the trend was similar.
It continued to rise until it reached a new all-time high, and the price rose accordingly, then both open interest and price plummeted. This was the case in September 2021 when open interest reached a record high and then again in November 2021.
Looking ahead, the same trend may occur in October 2021, when Dogecoin's opening price rose close to the previous historical high but ultimately ended in the same way - a collapse. These collapses almost always affect the Doge price, causing it to fall back to levels before the surge in open interest.
If this pattern continues, then Dogecoin's open interest and price could collapse. One possible scenario is that the Doge price will fall by 20% back to $0.15 before the cryptocurrency market is revitalized. |
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Post time 23-3-2024 07:44:53