Dogecoin’s (DOGE) open interest reached a yearly peak of $12 billion, but fell sharply between that peak and October. It rose again earlier this month, but is now on track to fall to its lowest point since November 10.
The drop in OI, as it is commonly called, is in line with the price action of DOGE, which has fallen 20% in seven days. So what’s next for the cryptocurrency?
Dogecoin traders reduce exposure, investors cautious
Dogecoin’s Open Interest currently stands at $1.42 billion. OI represents the total number of open contracts—long or short—in a futures or options market at any given time. Rising OI indicates that new positions are being added, reflecting increased engagement and confidence in the cryptocurrency’s price action.
On the other hand, a decrease in the indicator reflects the closing of positions, suggesting decreasing confidence among traders or a neutral outlook on the asset. Therefore, the notable drop in DOGE’s OI suggests that traders do not expect the short-term price movement to bring good gains.
If this trend continues, along with the price falling to $0.32, the cryptocurrency's value could see a prolonged correction.
Open Interest do Dogecoin. Fonte: Santiment
The Average Dollar Age Invested (MDIA) is another indicator that suggests a further decline. As the name suggests, MDIA is the average age of all coins on a blockchain weighted by purchase price.
When the MDIA increases, it suggests that holders are keeping their coins in wallets without active trading. This indicates stagnation and is typically seen as bearish. A drop in the MDIA suggests that previously dormant coins are moving, implying increased activity or trading. This is generally considered bullish as it can indicate renewed interest and liquidity.
According to Santiment, Dogecoin’s 90-day MDIA has increased, signaling that holders are keeping their coins largely stagnant. If maintained, this supports the bearish outlook for the cryptocurrency.
Average Invested Dollar Age of Dogecoin. Source: Santiment
Price prediction
On the daily chart, DOGE continues to lose momentum at key support levels. The coin has fallen below the $0.35 support region as the bulls failed to defend the zone. The Moving Average Convergence Divergence (MACD) is also supporting the decline.
MACD measures momentum. When the reading is positive, the momentum is bullish. But if it is negative, the reading is bearish. As seen below, the MACD reading is in the negative region. If this continues, the price of the memecoin could drop to $0.27.
Dogecoin Daily Analysis. Source: TradingView
On the other hand, if the bulls reclaim the $0.35 support and successfully defend it, this trend could change. In this scenario, DOGE could rally towards $0.48.
The article Dogecoin (DOGE): what to expect after a sharp price drop and HI? appeared first on BeInCrypto Brasil.
