Dogecoin's open interest has plummeted to levels not seen since October 2024, dropping over 16% to below $1 billion according to Coinglass data. This significant decline in market leverage coincides with a sharp 11% price drop, with DOGE breaching the critical $0.09 support level and dipping to August 2024 lows around $0.08 before a slight rebound to $0.09075.
The current situation mirrors October 2024, when similar open interest levels preceded a major uptrend that saw DOGE's price surge from around $0.155 to as high as $0.46, and open interest reach $4.45 billion by December 2024. That rally was fueled by multiple factors including Donald Trump's presidential election victory, Elon Musk naming a government agency after DOGE, and Federal Reserve rate cuts.
However, the macroeconomic outlook differs significantly this time. The Fed has made a hawkish pivot and is unlikely to lower rates until at least June, creating a less favorable environment for risk assets like meme coins. Despite this, some optimism remains as Elon Musk recently mentioned potentially "sending Dogecoin to the moon next year."
Market data reveals substantial bearish pressure. Dogecoin's market cap fell by over $1 billion, reflecting significant outflows. On the spot market, Coinalyze data shows a negative buy-sell delta of 400 million between February 5-6, with 3.1 billion in sell volume versus 2.6 billion in buy volume. Futures markets recorded $2.22 billion in outflows versus $2.18 billion in inflows, with open interest declining 16.7% to $986.39 million.
Trading sentiment appears divided. While the long/short ratio on Binance is 2 (indicating most traders are long), the ratio across all exchanges remains below 1, suggesting broader market bearishness. Interestingly, derivatives trading volume has surged by more than 100% to $6.5 billion, with options trading volume and open interest increasing by 381% and 135% respectively, indicating active trading despite the downturn.
Analysts offer conflicting outlooks. Crypto analyst Ali Martinez suggests DOGE could still drop to $0.054 before a potential bounce, while Mikybull Crypto argues that DOGE's RSI is at historical support levels that could prevent such a decline. Technical indicators show the Stochastic RSI at a bearish 13.70, with DOGE trading below both short- and long-term moving averages, confirming downward momentum.
For a meaningful reversal, bulls would need to reclaim the EMA20 at $0.11, potentially setting the stage for a move toward $0.12. Until then, continued selling pressure could push DOGE back toward $0.08.
