"Meme Coin Volatility Surge: Futures Data Warns of Further Price Declines"
1min read Meme coins, including DOGE, SHIB, PEPE, FLOKI, and others, have experienced significant volatility recently, sparking concerns among investors. A recent report suggests that the turbulence may not be over yet, as derivatives data indicates a potential further decline in the assets' prices.
On-chain analytics firm Glassnode recently highlighted a sharp drop in futures open interest (OI) across the meme coin sector. OI metrics, which indicate the total value of outstanding derivatives contracts, have plummeted since their peaks, signaling a potential bearish trend. For Dogecoin (DOGE), the 7-day moving average of futures OI experienced a 58.45% drop, sliding from $3.58 billion on December 9, 2024, to $1.49 billion currently. The situation is even more pronounced for other meme coins, with PEPE, BONK, and WIF seeing OI declines of 71.93%, 75.10%, and 69.83%, respectively. The popular Shiba Inu and Floki Inu coins also followed this trend, with SHIB’s futures OI decreasing by 74.41% and FLOKI recording a 69.18% drop.
The sharp decline in futures OI indicates a potential "leverage flush-out," where traders are closing leveraged positions, possibly due to dwindling confidence. This trend could signal a broader shift in sentiment across the meme coin sector, prompting caution among retail investors. The reduced OI might mean lower liquidity and higher volatility in the near term, suggesting that the speculative hype driving meme coins earlier this year might be fading, leaving prices vulnerable to further corrections.
The meme coin market’s struggles are not happening in isolation. The broader crypto market crash, impacted by macroeconomic pressures, and other factors like reduced trading volumes have weighed on the sentiments. Amid this, the meme coins, as riskier assets, often become the first to react negatively during broader market corrections. Besides, the recent concerns over the Solana meme coins like LIBRA token, which many deem as a rug pull project, have further dampened market sentiment.
Despite the market volatility, some meme coins have shown resilience. DOGE price today recorded marginal gains and exchanged hands at $0.2 