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Bittime - Dogecoin (DOGE) is back in the limelight. The meme token has skyrocketed 95% in the last 7 days, continuing a wild trend that's been going on for years. However, the rally was accompanied by a new record: Dogecoin futures interest reached $1.4 billion. This condition has sparked speculation regarding excessive optimism among investors.
Will Dogecoin Repeat Its 10x Rise?
Some analysts argue that the altcoin season is incomplete without a DOGE surge. This view has strong grounds. Dogecoin, with a market cap of $24 billion, ranks among the top 10 cryptocurrencies, and past price increases support that argument.
Technical analysts see a repeating pattern in Dogecoin. They believe that after 22 months of consolidation, DOGE is entering an explosive rally phase like in previous bull markets. For example, an analyst named ali_charts on the social network X posted a chart showing the similarity of DOGE's current movement pattern to the previous bull market.
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However, it should be noted that price charts on a logarithmic scale tend to understate past price fluctuations. As a result, a price increase of 120% in July 2020 or 145% in October 2022 could look like a flat move.
Apart from that, the definition of a bull market itself can be questioned.
Several periods that were considered bull markets were in fact marked by sharp corrections, such as a 67% decline in 40 days (June-July 2017) and a 47% correction in February 2021.
Regardless of whether DOGE's 120% gain in the week marks the start of a new bull run, Dogecoin's total futures open interest has never topped $1 billion before.
In fact, every time open interest surpasses $550 million, a sharp DOGE price correction always follows.
This raises the question: has the use of leverage changed fundamentally, or are retail investors lulled by the bullish trend?
Current Dogecoin Price
According to Market Bittime When this article was written (05/03/2024) the price of the DOGE/IDR pair was IDR. 2912 with an increase of around 15% in the last 24 hours.
Dogecoin Leverage: An Indicator for All Altcoins?
The high open interest in Dogecoin futures could be due to institutional players using DOGE prices as a representation of the altcoin market as a whole.
Additionally, shrewd whales (big investors) may take short-selling positions (betting the price down) on DOGE while opening long positions (betting the price rising) using leverage on other memecoins.
This kind of activity is not necessarily risky or detrimental, given that the strategy is much different from the reckless use of leverage by retail investors.
Excessive Optimism Among Bulls?
To understand the use of leverage in more detail, we need to analyze perpetual contracts that have a funding rate. This funding rate is adjusted every eight hours to balance supply and demand. A positive funding rate value indicates that long parties dominate the demand for additional leverage.
Data shows that DOGE's futures funding rate has reached the highest level in the last 18 months, namely 0.11% (equivalent to 2.3% per week). Generally, a funding rate above 1% per week indicates excessive optimism.
However, it should be noted that this figure is not always a signal of a price correction.
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Market Makers Need Liquidity
During a bull run, even market makers and whales may temporarily lack liquidity. This can last for several weeks. When liquidity is met again, the funding rate will return to normal, and will not necessarily be triggered by a price correction.
For comparison, funding rates on other crypto assets such as Bitcoin (BTC), Solana (SOL), and XRP (XRP) are currently around 1.5% per week. This indicates that perhaps the entire crypto market is "hot". Therefore, considering Dogecoin as a leading indicator of a sharp correction in the memecoin sector solely due to high leverage seems unreasonable.
How to Buy Dogecoin (DOGE) on Bittime
You can buy and sell Dogecoin (DOGE) in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
Dogecoin (DOGE) is available on Bittime with the market pair DOGE/IDR . To be able to buy DOGE USDT on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn the complete guide on how to buy Dogecoin (DOGE) on Bittime .
Monitor price chart movements of Dogecoin (DOGE), Bitcoin (BTC) , Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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