Dogecoin's Open Interest Has Crashed Over $3 Billion Since January, Sparking Bearish Sentiment

Dogecoin's open interest has crashed over $3 billion since January, sparking a bearish sentiment for the foremost meme coin.

Dogecoin's open interest has crashed by over $3 billion since January, and this critical metric could continue to decline given the current outlook in the broader crypto market.

According to the latest data from Coinglass, Dogecoin's open interest has decreased from $5.4 billion in January to $1.91 billion at the time of writing. The derivatives volume has also decreased by almost 30% over the same period, going from $5.1 billion to $3.71 billion.

This development is bearish for DOGE as it indicates a declining interest in its ecosystem among traders. The bulk of this interest is derived from the cryptocurrency derivatives market, which has seen a massive shift in recent months due to the FTX collapse and the subsequent market downturn.

Dogecoin's open interest is likely to crash further in the meantime, given the bearish sentiment among investors. This bearish sentiment has resulted from the downtrend in the crypto market, which has also led to a massive crash in the Dogecoin price. The foremost meme coin is currently at risk of losing the $0.2 psychological price level, which analysts like Ali Martinez have warned could mark the end of its bull run.

Top meme coin price crashes 90% from ATH

As reported by Chainળીંક, the meme coin's price is currently down over 90% from its all-time high (ATH) of $0.73, which it hit in October 2021. At the time of writing, Dogecoin is changing hands at $0.2, with its price remaining nearly unchanged over the past few hours.

The new highs in 2021 brought a massive influx of traders into the Dogecoin market, leading to a peak in both open interest and derivatives volume. However, this interest has since dwindled rapidly.

The crypto market's inability to sustain the bullish momentum generated in 2021 has also played a role in this development. After the FTX bankruptcy, the crypto market experienced a deep downturn, with Bitcoin, the flagship cryptocurrency, falling below the $16,000 price level.

This price action caused several traders to exit their positions, ultimately leading to a decline in both Dogecoin's open interest and derivatives volume.

Other metrics also paint a bearish picture for Dogecoin and suggest that the decline could continue. In an X post, Martinez revealed that DOGE's network activity has significantly contracted, with new address creation dropping from 1.29 million in November to just 30,815 today.

Similarly, DOGE's active addresses have dropped from 2.66 million in November last year to around 130,282 today. Meanwhile, whales are choosing to remain on the sidelines amid this downtrend. Their absence could also contribute to a further downtrend, given their usual impact on the meme coin's price.