The open interest of Polkadot futures soared to $1 billion, eclipsing Litecoin and XRP to make DOT the third-largest futures market.
On March 24, the price of Polkadot’s DOT token corrected by 23% in a brief six-hour period, resulting in $174 million in liquidations across the futures market. This swift downside move also cut the aggregate open interest by 26%. Now that DOT’s open interest is climbing to a new record high at $1 billion, investors may be worried that another price crash is on the way.DOT/USDT on Binance. Source: TradingViewAlthough the event severely hurt leveraged longs at the time, the token managed to rally 46% in 10 days, reaching an all-time high of $46. The explosive gain caused investors to recoup their confidence quickly, and the futures open interest has now reached a record high of $1 billion.Recently, KwikSwap, a decentralized exchange, expressed interest in using Polkadot’s layer-two solution to lower costs and increase transaction throughput. These might be a few of the fundamental reasons behind the increase in price and futures markets open interest.The price drop on March 24 was not specific to DOT, as the altcoin market capitalization plunged 10% during that period. Cointelegraph reported that FUD — fear, uncertainty and doubt — events pressured cryptocurrency markets, including the large futures and options expiry on March 26.Nevertheless, DOT’s 23% correction was much larger than most altcoins, and the reason behind it might lay in its $844-million futures open interest on March 24. As a comparison, XRP held $780 million in open interest, while Litecoin (LTC) registered $662 million.The impact of …
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