The cryptocurrency market is witnessing a shift in trading direction, as traders in the futures markets have begun taking short-selling positions on Dogecoin (DOGE), the largest meme coin in the market, amid a general decline in the meme sector.
Coinalyze data indicates that Dogecoin's funding rates have turned negative since Tuesday. Reaching -0.0027% as of Thursday, a level the market has not seen since October 2023. Funding rates are periodic payments that traders make based on the difference between prices in the futures and spot markets.
Although these rates are not unusually large. However, it indicates a bearish mood in the market as it continues to decline in conjunction with falling prices. Dogecoin lost 12% of its value over the past week, erasing all the gains it had made since March.
Dogecoin's open interest (DOGE), or the number of unsettled futures contracts, has also decreased. From about $800 million on Monday to $611 million as of Thursday. Which also indicates a decline in demand for the currency.
Rates briefly turned red during several eight-hour trading sessions in March. But not for as long as this week so far.
Coins across the meme sector recorded losses of up to 40% over a seven-day period. Traders are warning to stay away from high-risk currencies and move towards Bitcoin and stable currencies.
“When the price of Bitcoin falls,” says Neil Roarty, an analyst at investment platform Stocklytics, “meme coins tend not only to follow, but to lose a larger share of their value. Any plans for a summer of meme coins may have to be put on hold.”
As reported earlier this week, Dogecoin futures traders posted their worst day since May 2021, as the coin saw $60 million in long positions liquidated. This is an unusually higher number than Bitcoin futures.
These declines came as Bitcoin prices suffered over the past weeks amid $2 billion in sales from major holders. Net outflows from US exchange-traded funds, and a strong dollar.
