Dogecoin Traders Appear to Short Token as Meme Coin Frenzy Eases
DOGE has lost 12% over the past week, erasing all gains since March. The crypto market’s biggest meme token is starting to attract short bets amid a general decline in the meme sector. This trend may spell concern for meme coin enthusiasts.
Coinalyze data shows that Dogecoin (DOGE) funding rates have started to turn negative since Tuesday, reaching -0.0027% as of Thursday – levels last seen in October 2023. Funding rates are periodic payments made by traders based on the difference between prices in the futures and spot markets. Though these rates are not unusually high, a persistent decline alongside falling prices indicates a bearish mood in the market.
DOGE has suffered a 12% loss over the past week, wiping out all gains since March. DOGE funding rates are beginning to flip negative, signaling an increased bearish sentiment.
DOGE open interest, which refers to the number of unsettled futures contracts, has decreased significantly. From nearly $800 million on Monday, it fell to $611 million as of Thursday, pointing to a drop in demand for the tokens. Although the funding rates did briefly turn negative over a few eight-hour sessions in March, this week's ongoing decline is much more extended.
Tokens across the entire meme coin sector have recorded losses as high as 40% over the past seven days. This trend shows traders moving away from riskier tokens in favor of more stable options like bitcoin and stablecoins.
“When the price of Bitcoin falls, memecoins tend not only to follow but often lose an even greater share of their value,” said Neil Roarty, an analyst at the investment platform Stocklytics. “Any plans for a memecoin summer may have to be put on hold.”
As previously reported, DOGE futures traders recorded their worst day since May 2021 earlier this week. The token saw $60 million in longs liquidated, a figure unusually higher than bitcoin (BTC) futures. These drops came as bitcoin (BTC) prices have also suffered in recent weeks, amid $2 billion in sales from large holders, net outflows from U.S.-listed exchange-traded funds (ETFs), and a strong dollar.
This market turbulence highlights the inherent volatility of meme coins and the broader crypto market, particularly as traders reassess risks amid changing economic landscapes.
