Traders Increasingly...

Traders Increasingly Short Dogecoin Amid Record High Open Interest

By José Oramas November 12, 2024 In Dogecoin, Trading

Dogecoin coin on a blurred background with space for text

Dogecoin hit a three-year high over the weekend, with its open interest in options soaring to an all-time high of US$2.74B.
Despite the rally, trader sentiment is split, with roughly 50.75% of Monday’s DOGE options being short positions, indicating scepticism about the token’s sustained growth.
Analysts are advising caution, noting similarities to a 2020 trading pattern where Dogecoin dipped before a significant rebound.

Dogecoin (DOGE) is making headlines again as the cryptocurrency makes a three-year high after a rapid weekend rally. However, market data reveals that traders are shorting the memecoin, so its rise may be short-lived.

Data from CoinGlass shows open interest in DOGE options spiking to US$2.74B (AU$4.18B) on Monday, marking an all-time high for the token. This surpasses the previous peak of US$2.21B (AU$3.37B) seen in March, with DOGE futures often staying below the billion-dollar mark in recent months.

But market sentiment appears split. While Dogecoin’s recent rally suggests rising enthusiasm, Monday’s trading activity indicated a slight lean toward short positions, with about 50.75% of DOGE options held as shorts in the early hours of the day.

Although the balance shifted slightly toward long positions later, nearly half of all DOGE trades still reflect scepticism about the token’s ability to sustain its upward momentum.

Similarly, a Dogecoin analyst on X who goes by the name of Kevin, advised traders to remain cautious as we’re seeing a pattern similar to that of 2020, in which the coin dipped for a couple of weeks before reaching new heights.

For the first time in four long years #Dogecoin has completed the Textbook Weekly Golden Cross with the 50 SMA crossing the 200 signaling that higher prices are likely coming. In 2020 when we received this cross we did see a dip for a couple weeks before then basting to new all… pic.twitter.com/F24ov7K9GF
— Kevin (@Kev_Capital_TA) November 11, 2024

More Market Movement Ahead?

Like many other coins, DOGE’s recent price movement has coincided with Donald Trump’s re-election, a development that has boosted optimism around the cryptocurrency market as a whole as some believe a Trump administration will favour better crypto asset regulation and flexibility.

Some analysts speculate that Trump’s return could provide tailwinds for Dogecoin in particular, given its strong association with Elon Musk.

The Tesla CEO and avid Dogecoin supporter played a prominent role in Trump’s campaign and could play a part in the new administration. During his campaign, Trump proposed Musk would head a Department of Governmental Efficiency (D.O.G.E.), an agency that aligns with Dogecoin’s cultural influence.

As of now, Dogecoin hovers just below US$0.35 (AU$0.53), marking a 20% gain in 24 hours and its highest price since May 2021, when it briefly reached US$0.73 (AU$1.11). All in all, Dogecoin’s cultural appeal may be strong, and its dominance over the memecoin market remains undisputed, but the mixed trading patterns reveal a more tempered optimism about its future performance.