Since data indicates that Bitcoin price movement will not flip $36,000 this week, open interest in the cryptocurrency has reached its greatest levels in more than six months. On November 7th, Bitcoin dropped toward $34,500 as experts’ focus shifted to the rapidly increasing open interest.
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Open interest “surge” spooks Bitcoin pundits
Data from TradingView showed BTC price struggling to reclaim $35,000 as support. The largest cryptocurrency lacked clear direction into the Wall Street open, but market participants predicted that volatility would soon return. The reason, they said, was a sharp increase in open interest (OI) on derivatives markets.
“Almost 10k BTC (~$350MM USD) in open interest added today. Fireworks soon,” financial commentator Tedtalksmacro predicted on Nov. 7.
As Nosisnews reported, open interest reaching elevated levels has coincided with bouts of volatility in recent months. Current levels totaled nearly $15.5 billion at the time of writing, per data from CoinGlass. James Van Straten, research and data analyst at crypto insights firm CryptoSlate, described the fluctuations as “noticeable.”
“The CME exchange, preferred by institutional investors, has achieved a new record in open interest, with 105,380 BTC contracts open, valued at $3.68 billion. Binance has edged past this figure with open interest of approximately 113,500 BTC,” he noted.
“This trend points to increasing involvement in Bitcoin futures, hinting at either a positive shift in market mood or a move towards protective strategies by investors.”
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The sense of uncertainty over how the OI phenomenon would play out was shared by J. A. Maartunn, a contributor to on-chain analytics platform CryptoQuant.
Related: Bitcoin Exchange flow gap reaches 10k BTC: 5 Key takeaways for this week in bitcoin
In an analysis on Nov. 6, he suggested that OI was now in a territory that had previously seen 20% BTC price drawdowns.
“Historically, whenever this metric surpassed $12.2 billion, it resulted in a minimum 20% decline in bitcoin price,” he wrote on X, saying that OI deserved “significant attention.”
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Analysis: $36,000 BTC price “off the table” this week
Continuing the coverage, popular trader Skew referenced the significance of current price levels on low timeframes. Whoever is “wrong” on direction, he told X followers, would face difficulties, fuelling a potentially volatile price reaction. Looking ahead, monitoring resource Material Indicators concluded that $36,000 would remain the ceiling for the time being.
“Calling a local top at $36k doesn’t mean >$36k is off the table this year, but the metrics I’m looking at indicate that at the very least, it’s off the table for this week,” it said in its Nov. 6 analysis on X.
“That call also doesn't mean price will free fall back to the prior $25k-$28.5k range, but if a bull breakout isn’t validated this month, that range low is critical.”
Source: cointelegraph