The Dogecoin open interest has seen a massive crash in the last month, leading to concerns about the future prospects of the meme coin. It is now a long way from its March all-time highs and has returned to the low levels of early February.
Dogecoin Open Interest Sees 66.5% Crash
In March, the Dogecoin open interest had risen to a new all-time high of $1.91 billion after a month of steady increase. This was followed by an increase in the DOGE price as investors rushed to join the rally and secure gains. This steady growth would continue into the start of April, but since then, the price has been on a downtrend.
Data from Coinglass shows that on April 1, the total Dogecoin open interest came out to $1.87 billion. But in the space of one week, the open interest had fallen by $600 million. The decline continued through to the end of April and by the end of the month, the open interest was at $763 million.
With the month of May following the bearish trend of April, the decline in the open interest has been constant. At the time of writing, the total Dogecoin open interest is sitting at $625.7 million, a whopping 66.5% crash from its $1.87 billion level just a month ago.
The last time the Dogecoin open interest was this low was toward the end of February. However, the open interest is still a long way from its January lows when it was trending below $300 million. At the same time, the DOGE price is also higher, suggesting the last few months have been quite good for the meme coin.
How Will DOGE Price React?
The reaction to a sharp drop in open interest has always been the same, ending with the price of the cryptocurrency seeing a decline. Dogecoin has stuck to this trend as its price has dumped almost 50% at the same time as bears continue to exert dominance.
If the DOGE open interest continues to decline, then investors can expect the price to follow the same path. Such a crash could send the Dogecoin price below the $0.12 support, which could be the start of a downward spiral.
However, if the open interest does recover, then a reversal in price is expected as well. Mostly, this would depend on how the price of Bitcoin performs from now on, but as interest begins to grow and traders take more positions, it gives room for Dogecoin to grow.