Dogecoin's Derivatives Trading Dwindles Amid Price Decline
Dogecoin's (DOGE) persistent price decline has negatively impacted its derivatives market. As of writing, the meme coin's total open interest has plummeted to $2.51 billion, its lowest level since the beginning of the year.
Open Interest Decreases
Open interest represents the number of outstanding contracts (options or futures) that have not been settled. A decrease in open interest indicates that existing contracts are being closed without new ones being created, suggesting a decline in market activity.
Value Decline Impacts Derivatives
The downturn in Dogecoin's open interest can be attributed to its steady value decline. The ninth-ranked cryptocurrency currently trades at $0.10, a 30% drop in the past month.
Short Positions Increase
The negative funding rate (-0.026%) on July 6 indicated that more traders were holding short positions, expecting the asset's price to fall.
CMF Indicator Suggests Buying Pressure
Despite the value decline, DOGE's Chaikin Money Flow (CMF) has remained positive (0.03). This indicator measures money flow and a bullish divergence between price and money flow suggests that there is significant buying volume at lower prices.
Price Prediction
If buying momentum continues, DOGE may rebound to $0.11. However, if selling pressure intensifies, the price could fall to $0.08.
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