O Dogecoin Open Interest it rose to a new all-time high in early March, and although there was a small pullback, open interest has continued to maintain very high record levels since then. Given this continued high level, it could point to where the price of the meme coin is the next step using historical data.
Dogecoin Open Interest Maintains High Level
Open interest is a measure of the total number of futures contracts or options for a specific currency in the market at a given time. It can help to know how much money is flowing into that specific asset, thus revealing whether there is a high or loving interest in the asset.
For Dogecoin’s part, total open interest has been increasing in recent months, especially as the crypto market recovers, as shown data from Coinglass. A natural consequence of this was that the price also rose at the same time as the open interest and therefore there is a high correlation between open interest and the price.
The open DOGE contracts reached a new all-time high of US$1.47 billion on March 5, and the meme coin hasn’t looked back since. Despite a small drop in the following days, open interest is rising once again, reaching $144 billion on March 14 and taking the price with it.
Although the increase in open interest points to great optimism in the market, historical performance in times like these also calls for caution. Taking a look at what happened the previous times Dogecoin’s open interest reached new highs could give an idea of where the price will head next.
Where can DOGE go from here?
Over the years, there have been several moments when the Dogecoin Open Interest reached new all-time highs and a trend emerged, so to speak. Looking already at 2021, when open interest reached ATHs several times, this trend is developing in a similar way.
A sustained increase until a new all-time high is reached, with the price rising, and then followed by a fall in open interest as well as price. This was the case in September 2021 when open interest reached a new all-time high, and again in November 2021 when it reached another ATH.
Moving forward, the same trend is observed in October 2021 when the DOGE The opening rose close to its previous high, but ended the same way as the previous ones – with a drop. These drops almost always also affect the price of DOGE, causing it to fall to levels prior to the increase in open contracts.
If this pattern holds this time, then a decline could be ahead for Dogecoin open interest and the DOGE Price by extension. A likely scenario is a 20% drop that could send the DOGE the price returned to $0.15 before the crypto market gained momentum again.
DOGE bulls hold up price | Source: DOGEUSDT on Tradingview.com
Featured image from Decrypt, chart from Tradingview.com
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