Cryptocurrencies Ethereum, Solana, and Dogecoin experience significant downturn, leading to waning trader enthusiasm
The crypto market experienced a downturn during the correction on Friday, impacting major cryptocurrencies like Ethereum, Solana, and Dogecoin, which struggled to maintain key support levels. Prices of Ethereum, Solana, and Dogecoin saw declines ranging between 2% and 5% on that day.
Data from the crypto intelligence tracker Santiment revealed a decrease in open interest for top cryptocurrencies such as Bitcoin, Ethereum, and Solana following the market correction. This decline in open interest is often indicative of waning trader interest in a particular asset.
Specifically, Ether and Solana observed a drop in Open Interest (OI) from derivatives traders after numerous long positions were liquidated in response to the market correction. The open interest for BTC, ETH, and SOL has visibly decreased. Ethereum and Solana were unable to sustain levels above crucial support points at $3,000 and $150, respectively, early on Saturday. These assets, along with Dogecoin, which are among the top 10 cryptocurrencies by market cap, have yet to initiate a recovery from the recent market correction on Binance.
Analysts at Santiment have expressed optimism for a potential “weekend relief rally” post the asset price declines. However, as of the latest update, Ether is trading at $2,928, Solana at $145.27, and Dogecoin at $0.1087.
The Santiment data also highlighted the importance of Open Interest in influencing cryptocurrency prices. Higher Open Interest typically signifies increased liquidity and capital inflow, enhancing market efficiency. Conversely, a decrease in Open Interest signals market liquidation and diminishing demand for an asset, fostering bearish sentiment among investors.
Additionally, the funding rate plays a crucial role in affecting cryptocurrency prices. Funding fees help bridge the gap between spot prices and futures contract prices, amplifying liquidation risks for traders. A consistently positive funding rate indicates bullish market sentiment and anticipation of price appreciation, while a negative funding rate suggests a bearish outlook and potential trend reversal towards lower prices.
In conclusion, the recent market correction has impacted major cryptocurrencies like Ethereum, Solana, and Dogecoin, leading to declines in their prices and open interest. Traders are closely monitoring these developments for potential market movements and price trends in the near future.
