The data shows that Bitcoin open interest has seen a sharp rise alongside the recovery rally that the asset price has gone through.
Bitcoin open interest has seen a spike recently
As pointed out in a new by CryptoQuant community analyst Martun post At X, Bitcoin open interest has increased. “open interest” refers to an indicator that keeps track of the total amount of BTC-related derivative positions that are currently open on all centralized exchanges.
When the value of this metric increases, it means that traders are opening new positions in the market. As the total amount of leverage in the sector increases when positions increase, this type of trend may increase further. volatility in the value of the property.
On the other hand, the indicator going down means that derivatives users are either voluntarily closing their positions or being forced to close by their platforms. Such a trend could result in muted price action for cryptocurrencies.
Now, here’s a chart that shows the trend in the 24-hour percentage change for Bitcoin open interest over the past month or so:
Looks like the value of the metric has been quite positive in recent days | Source: @JA_Maartun on X
As seen in the graph above, Bitcoin open interest has recently recorded a sharp positive shift, suggesting that investors have opened a large number of positions within a short window.
The impetus behind this trend is likely to be the significant price recovery that cryptocurrencies have seen over the past few days. Investors find sharp moves in assets exciting, so they take more bets than usual whenever they happen.
As mentioned earlier, an increase in open interest can make BTC more volatile. The reason behind this is that Mass fluid phenomenon The more leveraged positions there are in the market, the more potential turns. Such events can be violent, with all liquidity flowing back into the price movement that triggered them.
A slight increase in open interest may still not be bad for the asset, but when it’s within a narrow window and large enough, the risk of the price being negatively affected can actually be substantial. .
As the analyst highlighted in the chart, the latest jump in open interest has shifted its percentage into a zone that has generally signaled trouble for Bitcoin over the past month.
Given this pattern, it remains to be seen whether the derivatives market will have to see another cooldown before the asset rally continues.
BTC price
Bitcoin previously recovered above the $102,000 mark, but the coin seems to have since recovered, as its price has returned to $100,800.
The price of the coin has observed a sharp increase over the last two days | Source: BTCUSDT on TradingView
Dall-E, featured image from CryptoQuant.com, chart from TradingView.com
