During this bullish season in the crypto community, the frenzy surrounding memecoins has been the talk of the town. Pepe and WIF have skyrocketed into the top 20 cryptocurrencies by market capitalization within just a year of their public release.
These memecoins have become hugely popular in the crypto leverage market, where traders speculate on their prices by either going short or long.
Remarkably, four out of the top 10 cryptocurrencies by open interest (OI) are memecoins, with Pepe leading the pack with $812.6 million in OI, nearly half of Solana's $1.7 billion in OI.
Apart from Pepe, Dogecoin, Bonk, and Dogwifhat have also made it into the top 10. Bitcoin holds the top spot with $11.1 billion in OI, followed by Ethereum with $9.15 billion.
It's worth noting the significant discrepancy in OI between the top and bottom of the list. While Bitcoin's OI is a staggering $11 billion, Near Protocol, in the tenth spot, has only $230 million in OI, indicating a substantial difference in trader interest.
The recent surge in OI for memecoins is attributed to their bullish momentum over the past few weeks, with Pepe hitting a new all-time high and WIF reaching a new multi-week high above $3.30.
Open Interest refers to the total value of pending derivative contracts that have not yet been settled. It increases when new contracts are added and decreases when contracts are settled. A growing OI indicates bullish market momentum as traders open more contracts in anticipation of price movements.
Despite the surge in memecoin prices and OI, funding rates remained negative for memecoins across crypto exchanges.
Funding rates represent the cost of holding a position in a perpetual swap or futures contract relative to the asset's spot price, with positive rates indicating bullish sentiment and negative rates indicating bearish sentiment.
May 2024, Cryptoniteuae