Dogecoin’s open interest has fallen sharply in the last month, raising concerns about the future prospects of the meme coin. It is still far from its all-time high in March and has returned to its lows in early February.

Dogecoin open interest plummets 66.5%

In March, Dogecoin holdings rose to an all-time high of $1.91 billion after a month of steady growth. DOGE prices subsequently rose as investors joined the rally and took profits. This steady growth continued until early April, but prices have been on a downward trend since then.

According to Coinglass, on April 1, the total open interest of Dogecoin reached $1.87 billion. But within a week, the open interest dropped by $600 million. This downward trend continued until the end of April, and the open interest was $763 million at the end of the month.

Following the bearish trend in April, open interest has continued to decline in May. As of this writing, Dogecoin open interest totals $625.7 million, a 66.5% drop from the $1.87 billion level a month ago.

The last time Dogecoin open interest was this low was at the end of February. However, open interest is still a long way from the January lows, when it trended below $300 million. Meanwhile, DOGE’s price is also higher, suggesting that the past few months have been pretty good for the meme coin.

How will DOGE price react?

The reaction to a sharp drop in open interest is always the same, ultimately leading to a drop in the price of the cryptocurrency. Dogecoin has stuck to this trend, with its price dropping by nearly 50% as the bears continue to dominate.

If DOGE holdings continue to decline, then investors can expect the price to follow the same path. Such a crash could take the Dogecoin price below the $0.12 support level, which could be the start of a downward spiral.

However, if open interest does recover, then the price could also reverse. Mostly, this will depend on how the Bitcoin price performs from now on, but as interest begins to grow and traders take more positions, this gives Dogecoin room to grow.

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