Shiba Inu Open Interest Suffers 40% Crash, What Does This Mean For Price?
March 18 2024 - 12:00PM
NEWSBTC
The Shiba Inu open interest has hit a snag after a particularly
good run. The open interest had risen quickly alongside the price
of the meme coin, which climbed close to its previous all-time high
earlier in March. However, the cryptocurrency has been unable to
maintain this uptrend, leading to a significant drop in the open
interest. Shiba Inu Open Interest Sees Over 40% Decline According
to data from Coinglass, the Shiba Inu open interest had hit a new
two-year high on March 6 when its price crossed over the $0.000032
threshold. Since then, however, it has been on a decline, seeing a
near-constant decline each day since. Related Reading: Bernstein
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Monday, March 18, the Shiba Inu open interest had dropped from its
$135 million all-time high to just $80 million. This decline
translates to an over 40% decrease in the space of two weeks. At
the same time, the price of the meme coin has followed the same
trend and has dropped from its yearly highs above $0.00004 to
$0.000028 at the time of writing. Now, the open interest for any
cryptocurrency is important because it serves as a measure of the
total interest in that asset at any given time. It basically shows
the total number of all futures and/or options contracts for a
particular asset. So in this case, it shows the amount of money
invested in SHIB derivative products at any time. Given this, an
increase in the open interest can be bullish for a cryptocurrency
such as Shiba Inu, while a decrease can be bearish. This is
because, the lower the open interest, the less money is being put
into that particular asset, thereby decreasing the demand. So this
could negatively affect the price. Will SHIB Price Continue To
Decline? As seen historically, a decline in open interest has often
coincided with a decline in price. As such, the present decline
being experienced by Shiba Inu could spell bad news for its price
going forward. The effect is already being felt with the price of
SHIB dropping significantly over the weekend, although it has
started to recover as the new week opens up. Related Reading:
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Meme Coin To get an idea of where the price might be headed next,
we can take a look at the last time that the Shiba Inu open
interest was this high, back in 2021. The open interest had reached
its current all-time high in October 2021, but after peaking, both
the open interest and the SHIB price would suffer tremendously.
Over the course of the next few months, the SHIB price would fall
more than 50%, following the same trend as the open interest. If
this trend were to continue this time around, then the SHIB price
may be headed for a price crash. However, 2021 marked the end of
the bull market, while the current bull cycle is only in the
beginning stages. In this case, there is more demand, which would
mean there is more of a cushion to mitigate a price crash. SHIB
price drops to $0.00002783 | Source: SHIBUSDT on Tradingview.com
Featured image from Bitcoin News, chart from Tradingview.com
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