Dogecoin Traders Appear to Short Token as Meme Coin Frenzy Eases

As a seasoned crypto investor with several years of experience under my belt, I’ve seen my fair share of market fluctuations. But the recent turn of events in the meme coin sector, specifically Dogecoin (DOGE), has given me pause. The data from Coinalyze is concerning – negative funding rates and decreasing open interest are clear signs of bearish sentiment.

As a crypto investor, I’ve noticed that the hype around the biggest meme token in the market has started to wane, leading to an increase in short bets against it. This trend is particularly concerning given the broader downturn in the meme coin sector. It’s important for us to keep a close eye on this development and consider adjusting our investment strategies accordingly.

According to Coinalyze’s data analysis, Dogecoin (DOGE) funding rates have shifted into negative territory since Tuesday, standing at -0.0027% as of Thursday. This figure represents the payments made by traders in the futures market based on the disparity between the futures and spot market prices, a level last seen in October 2023.

The persistent decline in these rates, although not excessively high, reflects a pessimistic sentiment in the market as they coincide with falling prices. Over the last week, DOGE has experienced a setback of 12%, completely reversing its progress made since March.

Dogecoin Traders Appear to Short Token as Meme Coin Frenzy Eases

As an analyst, I’ve noticed that the open interest for DOGE, which represents the amount of unfilled futures contracts, has decreased significantly from around $798 million on Monday to $611 million by Thursday. This reduction suggests a decrease in the demand for Dogecoin tokens in the derivatives market.

In March, the rates momentarily shifted to red during some eight-hour trading windows. However, they haven’t maintained this trend for an extended timeframe as observed thus far in the current week.

Meme coin assets have experienced significant declines, with some losing up to 40% of their value over the past week. Cautious investors are shifting their focus towards less risky options like Bitcoin and stablecoins.

Neal Roarty, an analyst at Investment Platform Stocklytics, stated in an email to CoinDesk on Thursday that when Bitcoin’s price decreases, memecoins often mirror this trend and experience a more substantial loss in value. Consequently, any anticipations of a memecoin boom may need to be postponed.

In my recent findings, I’ve uncovered that DOGE futures traders experienced a particularly tough day this week, with over $60 million worth of long positions being liquidated – marking the largest single-day loss since last May. Surprisingly, this figure outpaced the equivalent losses for Bitcoin (BTC) futures.

I’ve noticed a recent downturn in bitcoin (BTC) prices, which can be attributed to several factors. Large investors sold off approximately $2 billion worth of the cryptocurrency. Moreover, there were net outflows from U.S.-listed exchange-traded funds (ETFs), and the strength of the dollar has further contributed to this trend.

2024-06-20 13:19

Dogecoin Traders Appear to Short Token as Meme Coin Frenzy Eases

Read More

Minority Mindset