Dogecoin DOGE/USD is beginning to see a surge in short bets as the broader meme sector experiences a downturn, raising concerns about the stability of meme coins.
What Happened: According to Coinalyze data, DOGE funding rates turned negative on Tuesday, reaching -0.0027% by Thursday, a level not seen since October 2023.
Funding rates, which are periodic payments between traders based on the difference between futures and spot market prices, signal market sentiment.
Although the current funding rates are not exceptionally high, their continuous decline along with falling prices reflects a bearish market sentiment.
Over the past week, DOGE has dropped 12%, wiping out gains accumulated since March.
Open interest in DOGE, representing the number of unsettled futures contracts, has plummeted from nearly $800 million on Monday to $611 million by Thursday, indicating reduced demand for the token.
The negative funding rates, which briefly appeared in some trading sessions in March, have now persisted longer this week.
Also Read: ‘TrumpCoin’ Was Launched By Barron Trump With Donald Trump’s Approval, Martin Shkreli Alleges
Why It Matters: The entire meme coin sector has suffered losses up to 40% over the past seven days as traders shift from riskier assets to more stable options like bitcoin and stablecoins.
Earlier this week, DOGE futures traders faced their most challenging day since May 2021, with $60 million in long positions liquidated, surpassing even Bitcoin BTC/USD futures.
This decline comes as bitcoin prices have struggled in recent weeks due to $2 billion in sales from large holders, net outflows from U.S.-listed exchange-traded funds (ETFs), and a stronger dollar.
These developments underscore a broader shift in the crypto market, with investors becoming more cautious and moving towards safer assets.
As the market continues to evolve, the performance of meme tokens like DOGE remains under close scrutiny.
What’s Next: For more insights into the future of digital assets and the ongoing trends in the crypto market, be sure to attend Benzinga’s Future of Digital Assets event on Nov. 19.
Read Next: Solana Down, Floki, Bonk Crashing: What Is Going On With Altcoins?
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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