Dogecoin, like the rest of the crypto market, has seen a slow down over the last day that has greatly impacted its price. However, this slowdown isn’t completely limited to the price as the open interest-weighted funding rate of the meme con has seen a significant decline over the last day.
Dogecoin OI-Weighted Funding Rate Crashes 50%
Over the last few days, as the Dogecoin price rose, so did the OI-weighted funding rate. This is normal, given that the funding rate follows market sentiment. In times when crypto traders are very bullish, the funding rate rises as long traders have to pay short traders to keep their positions open. Then, when sentiment is skewed toward bearishness, funding rates tend to drop, and short traders pay long traders to keep their positions open.
This is important as the funding rates help exchanges to keep contract prices and their underlying asset prices balanced no matter the market conditions. These fees are charged at intervals by the exchanges, but the duration between each charge varies from exchange to exchange.
Having explained that, it tells us that the drop in the Dogecoin OI-weighted funding rate is a show of bearishness among investors. When the Dogecoin price hit $0.17 on Thursday, the OI-weighted funding rate touched 0.0243%. However, as the price has dropped back down toward $0.16, the OI-weighted funding rate has now dropped to 0.0105%, according to data from Coinglass.
This drop is a more than 50% decline from its Thursday figures and shows how fast sentiment can turn on a cryptocurrency such as Dogecoin. However, if the Dogecoin price does begin to recover once again, then the OI-weighted open interest will rise.
Open Interest Falls Alongside DOGE
Amid the decline in the Dogecoin price, the open interest has also taken a hit as well. Its recovery to almost $1 billion on Wednesday, May 22, has been rocked by a 10% crash that has sent it back down toward $900 million once more.
The majority of this decline came in the last 24 hours, where Coinglass data shows that the Dogecoin open interest saw massive losses across all major exchanges. The largest drop in open interest came from the Kraken crypto exchange, dropping 35.94%.
This was followed by dYdX with an 18.57% drop, and Coinbase with an 11.36%. Other exchanges saw varying declines between 1.25% and 7.4%, and in total, the open interest has dropped 5.31% in the last day. The total open interest is now sitting at $907.8 million.
Dogecoin’s price is currently trending at $0.1587, with a 4.59% decline in the last 24 hours. Honorable mention of Kabosu, the Shiba Inu dog behind the infamous Dogecoin logo, who recently passed away.
Featured image created with Dall.E, chart from Tradingview.com
