Shiba Inu open interest has hit a snag after a particularly good run. Open contracts had rose quickly along with the price of the meme coin, which rose close to its previous high in early March. However, the cryptocurrency was unable to maintain this upward trend, leading to a significant drop in open interest.
Shiba Inu Open Interest Sees Over 40% Decline
According to data from Coinglass, Shiba Inu open interest reached a new two-year high on March 6 when its price broke the $0.000032 threshold. Since then, however, it has been in decline, recording an almost constant decline every day since.
On Monday, March 18, Shiba Inu’s open interest fell from its all-time high of $135 million to just $80 million. This decline translates into a reduction of over 40% in the space of two weeks. At the same time, the meme coin price followed the same trend and fell from its yearly highs above $0.00004 to $0.000028 at the time of writing.
Now, the open interest for any cryptocurrency is important because it serves as a measure of the total interest in that asset at a given time. Basically, it shows the total number of all futures contracts and/or options for a given asset. So in this case, it shows the amount of money invested in SHIB derivative products at any time.
Given this, an increase in open interest could be bullish for a cryptocurrency like Shiba Inu, while a decrease could be bearish. This is because, the lower the open interest, the less money is being placed in that specific asset, thus decreasing demand. Therefore, this may negatively affect the price.
Will SHIB price continue to fall?
As seen historically, a decline in open interest has often coincided with a decline in price. As such, the current decline experienced by Shiba Inu could spell bad news for its price in the future. The effect is already being felt with the price of SHIB falling significantly over the weekend, although it has started to recover as the new week opens.
To get an idea of where the price might go next, we can take a look at the last time Shiba Inu open interest was this high, in 2021. Open interest reached its current all-time high in October 2021 . , but after the peak, both open interest and SHIB Price would suffer tremendously.
Over the next few months, the SHIB Price would fall by more than 50%, following the same trend as open interest. If this trend continues this time, then the SHIB Price may be heading towards a price drop.
However, 2021 marked the end of the bull market, while the current bull cycle is only in the early stages. In this case, there is more demand, which would mean there is more protection to mitigate a price drop.
SHIB price drops to $0.00002783 | Source: SHIBUSDT on Tradingview.com
Featured image from Bitcoin News, chart from Tradingview.com
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