Open interest, which can be used to determine market strength behind price trends, jumped to all-time highs in dogecoin terms
Dogecoin’s derivatives market have become busier than ever as prices rose sharply following Twitter’s decision to replace its popular blue bird logo with a picture of a Shiba Inu dog earlier this week.
Open interest (OI) in stablecoin-margined dogecoin (DOGE) futures contracts surged to nearly 6 billion DOGE tokens as of Tuesday night, data from Coinanlyze shows, setting a record lifetime peak. This represents $600 million worth of dogecoin in unsettled futures positions as of Wednesday.
The previous peak for stablecoin-margined contracts was five billion DOGE tokens in November 2021, valued at over $1 billion at the time. Stablecoin-margined contracts are settled in tokens such as tether (USDT).
Meanwhile, coin-margined contracts on dogecoin – which settled in other assets, such as bitcoin, instead of stablecoins – saw over $55 million in total open interest as of Wednesday.
Stablecoin or fiat-margined futures offer linear payoff as the value of the collateral remains steady irrespective of the broader market trend. Meanwhile, coin-margined contracts offer a non-linear payoff and are more prone to liquidations, as the trader takes a loss on both the collateral and futures contract when the market goes against his/her bet.
Thus, stablecoin-margined contracts are better suited to risk averse traders and for hedging while coin-margined contracts are preferred by aggressive traders, particularly during bull runs.
Source: CoinDesk
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