Dogecoin's open interest reaches new ATH – Is this a peak signal for DOGE?

Dogecoin's (DOGE) open interest hit a record high of 4.6 billion USD on November 23, indicating increased leverage demand being utilized by traders. This growth occurs despite DOGE still trading about 35% lower than its all-time high (ATH) in May 2021. Contributing factors to this surge include positive sentiment from investors and increased trading in the derivatives market.

However, this increase may lead to the risk of a cycle peak, especially if leveraged long positions are not self-balancing, resulting in forced liquidations. Trading history shows that record open interest can coincide with significant price volatility, as seen with DOGE in April 2024, when the market experienced a sharp correction after a surge.

Given these developments, monitoring market conditions and influencing factors from Elon Musk or fluctuations in institutional sentiment will be crucial in determining the upcoming trend of DOGE.