Dogecoin (DOGE) futures open interest surged to an all-time high of $4.6 billion on November 23, surpassing the previous record by 100%. This expansion represents a significant increase in leverage demand and is notable because DOGE was trading 35% below its May 2021 high of $0.74.
Traders are concerned that DOGE’s 224% rise from November 3 to November 23, driven by derivatives, could signal a cycle peak reminiscent of the April 2024 price action.
DOGE open interest (green) and DOGE/USD. Source: Coinglass
From March 20 to March 28, DOGE experienced an 82% price surge, reaching a high of $0.23 with futures open interest peaking at $2.3 billion. Overly leveraged long positions resulted in significant forced liquidations when DOGE corrected by more than 15% in less than 5 days. The correction lasted three weeks, with the price falling 40% to $0.14 by April 19.
DOGE Leverage Demand and Elon Musk’s Influence
To assess whether the recent surge in DOGE open interest represents similar risks, it is important to examine the funding ratio of the perpetual contract. In the derivatives market, long (buy) and sell (sell) positions are continuously matched, but the demand for leverage fluctuates. A positive funding ratio indicates that buyers are compensating sellers to maintain their positions.
DOGE average 8-hour funding rate. Source: Coinglass
The current monthly cost of holding a leveraged long position in DOGE is approximately 2%, which falls within the 0.5% to 2.1% range considered neutral. The brief spike to 7.5% on November 23rd does not represent the usual cost of leverage. This is because the interest rate resets every 8 hours. Unlike previous DOGE price surges, this move was primarily fueled by spot market activity.
DOGE’s 161% rally through November 25 may seem impressive at first glance, but when compared, it lags behind competitors like Stellar (XLM), Cardano (ADA), and XRP (XRP).
DOGE/USD (blue) vs. XLM, ADA, XRP, and MANA. Source: TradingView
It is unclear whether the rise in leverage demand for DOGE positions coincides with notable gains in so-called “dinosaur coins,” a term some analysts use to describe the surge in altcoin values that was prominent prior to 2018.
For example, if Dogecoin’s price surge was primarily driven by Tesla and SpaceX CEO Elon Musk’s frequent posts about newly elected Donald Trump’s initiative known as DOGE, one might think Dogecoin could be separated from other altcoins. Co-led by Elon Musk and Vivek Ramaswamy, the department aims to improve the efficiency of the U.S. government.
X Social network post. source: Elon Musk
Considering Dogecoin’s history as a fun, community-driven project, as opposed to “dinosaur coins” that aimed to revolutionize the world with blockchain technology, the widespread popularity of the Shiba Inu mascot is likely to drive up the price of Dogecoin independent of other cryptocurrencies. You can.
With regard to the sharp increase in DOGE open interest, there is no immediate concern among traders about chain liquidations as long as leverage remains balanced.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.