Memecoin Market Faces Major Deleveraging, Signaling Potential Shift in Sentiment

The memecoin market, which was once buoyed by speculative interest and viral trends, is now seeing a rapid cooling off.

Futures open interest (OI) across several prominent memecoins has plummeted from its peak, with traders unwinding leveraged positions and overall market sentiment shifting decisively against memecoins. The sector’s “correction” has been striking, with several major tokens—such as $DOGE, $PEPE, $BONK, and $WIF—experiencing sharp declines not only in prices but also in futures OI, and to the apparent delight of many market commentators.

Futures Open Interest Drops Across the Sector

The drop in futures OI, which means that the total value of open futures contracts for a particular asset is going down, is an important way to see how much people are really interested in the asset. In the case of $DOGE, which is the leading memecoin by market capitalization, this interest seems to have vanished. The 7-day moving average of the futures OI for $DOGE has dropped 58.45%. From a peak of $3.58 billion on December 9, 2024, the futures OI for $DOGE has fallen to just $1.49 billion as of today.

The trend does not appear to be limited just to $DOGE. Other memecoins now find themselves in a similar situation. $PEPE, which enjoyed a glorious run of success, has seen its futures OI drop a staggering 71.93%, from $1.25 billion to $351 million, just about a week after we published our last report. $BONK, another highly popular memecoin, saw a 75.10% dip in its futures, with OI going from $715 million to $178 million.

Meanwhile, $WIF, a former darling of the sector, with a very loyal following, saw its futures OI decrease by 69.83%, from $653 million to $209 million, outstanding on a mere two-week window. Moses supposes these declining figures signal two potential developments: the trades that were making prices go up have stopped going up and have begun to go down, or market participants have decided these trades aren’t worth the risk anymore.

Smaller Tokens Also Experience Decrease in OI

The most significant declines in the memecoin sector’s futures OI have occurred in the sector’s largest tokens by market cap, but this trend has not spared even the smallest tokens in the memecoin sector. Once a top meme on the internet and in crypto, $SHIB has seen its futures OI decline more than any other memecoin recently, down 74.41% from $323 million in April to just $83 million in October. $FLOKI, which had previously seen its interest surge, has also come down tremendously, with an OI that now sits at just $12.9 million, a decline of 69.18% in a very short timeframe. While these tokens have smaller OI figures than the memecoins at the tops of the charts, the sharp declines in their fortunes are very noteworthy.

Futures Open Interest across memecoins sector has dropped significantly since their peaks.$DOGE‘s Futures OI 7D moving average saw a 58.45% decline, falling from $3.58B on Dec 9, 2024, to $1.49B today: https://t.co/5yBcLzcXMA

How do other memecoins compare? Let’s dive in 👇 pic.twitter.com/oIKRmQdsBx

— glassnode (@glassnode) February 19, 2025

Why the Decline in Futures OI Matters

The sharp decrease in futures OI across the memecoin sector indicates several probable factors. The key one is deleveraging, where traders who borrowed funds to speculate on price increases are now unwinding their positions. This happens when prices stagnate or fall, forcing leveraged traders to close their positions to avoid larger losses. The large drops in OI across multiple memecoins suggest that a considerable portion of leveraged speculative activity has been unwound—from as much as 11% of the total OI in Dogecoin to at least 8.3% in Shiba Inu.

The drop in futures OI might point to a deeper shift in sentiment across the sector. The speculative frenzy that gripped the market appears to have tapered off, with traders much more reticent about taking on new positions in these very volatile tokens. If price doesn’t pick up soon, it could signal a more sustained move away from memecoins. Traders probably got into these tokens with the hope that they would make quick gains, but given the market’s current drift, it seems many are reassessing both their memecoin and memestock strategies.

Potential Implications for the Memecoin Market

A decline in futures open interest alone does not signal a dim future for the memecoin market. However, it is a departure from the meme’s favor and implies that these coins now lack the speculative hype that drove their prices up over the past year. In any case, the future price action of either memecoin will likely be dictated more by community sentiment, social media engagement, and the kind of bullish narratives that have historically pumped up prices, and less by what traders are doing in the futures market. To be clear, the current market for futures on DOGE and SHIB seems to be in a downtrend. But Meme Monero is in no danger of a death spiral. We can only look forward and hope that community-driven, narrative-fueled memecoins continue to be a thing.

For newly established or smaller memecoins, the decrease in the futures OI might indicate that the market is losing its tolerance for tokens that don’t have a clear purpose or robust community backing. The speculative intensity that often drives these coins’ prices up might be dialed back these days, meaning that only the memecoins with real community support or tokenomics that kinda work are still around to be speculated upon.

To conclude, the sharp decreases in futures open interest across memecoins mean that the market is cooling off and sentiment is shifting. The deleveraging process—along with a possible loss of speculative interest—is likely to keep the memecoin sector consolidating for the time being. Of course, some tokens may experience price surges—indicative of a speculative trade—that keep the memecoin dream alive. But most traders seem to be anticipating a period of much-drier pricing action and are, accordingly, positioning themselves much more cautiously than in the past.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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