Dogecoin, Solana, and XRP’s Open Interest Declined: Is This a Bearish Signal?

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In Brief

  • Dogecoin’s open interest plummeted 64%, Solana and XRP also saw major drops.
  • Open interest across major cryptos, including DOGE, SOL, and XRP, fell by 51%.
  • Decline hints at reduced trading activity and potential market sentiment shift.

Recent data highlights a significant downturn in the open interest of major cryptocurrencies such as Dogecoin (DOGE), Solana (SOL), and Ripple (XRP).

With a combined drop of 51%, these altcoins spark debate over the implications for their future market positions.

Open Interest Declines Across the Crypto Market

Open interest, a crucial indicator of market sentiment and liquidity, reflects the total value of outstanding futures contracts yet settled. For cryptocurrencies, these metrics provide insights into investor behavior and market dynamics.

Dogecoin led the recent decline, with its open interest plummeting by 64% to $668.2 million since the start of April. Solana and XRP also witnessed considerable reductions, decreasing by 47% to $1.51 billion and 44% to $497.67 million, respectively.

This widespread decline compate with the open interest levels of Bitcoin, which has dropped to those observed during the FTX collapse, further intensifying concerns about the broader state of the crypto market.

“The Open Interest Oscillator has cooled down significantly from the peak of 73K, currently at -15%. Normally, a rally starts from the lower bounds, but in our case, it is hindered by the pressure from bearish market orders.” Axel, a verified analyst from CryptoQuant, stated.

The sharp drop in Dogecoin’s open interest suggests a pullback in trading activity and potentially diminished investor confidence. This is corroborated by Dogecoin’s market performance, where it continues to trade near the lower end of its short-term range.

Such trends often signal consolidation phases, which could precede further losses unless there is a significant uptick in buyer engagement.

Read more: Dogecoin (DOGE) Price Prediction 2024 / 2025 / 2030

Dogecoin, Solana, and XRP’s Open Interest Declined: Is This a Bearish Signal?
Dogecoin Futures Open Interest. Source: Coinglass

Solana’s situation reveals similar challenges. Apart from its falling open interest, the network saw a drastic 95% decrease in its monthly transaction volume, falling to $7.32 trillion in April from much higher levels in March. The declining network activity and bearish technical patterns suggest that Solana may struggle to regain its previous highs.

XRP’s open interest scenario is slightly different, given the recent whale activity involving the transfer of 29 million XRP tokens from Bitstamp to an undisclosed wallet. While such movements have historically been precursors to price surges, reliance on a single event for market prediction is precarious.

Moreover, the ongoing legal tussle between Ripple Labs and the US Securities and Exchange Commission over XRP’s status as a security continues to loom over its market prospects, casting uncertainty on its potential recovery.

Read More: Everything You Need To Know About Ripple vs SEC

Despite these challenges, the possibility of a sudden reversal exists, particularly for XRP. Reduced leveraged positions might hint at short-term selling pressure. Still, the dominance of perpetual contracts in its open interest composition allows room for swift price changes if buying activity resumes.

Top crypto platforms | May 2024

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