Bitcoin Open Interest Rises Despite Decline In Price
As pointed out by an analyst in a CryptoQuant , the BTC open interest has shown uptrend over the past month, despite the price of the crypto moving down.The “open interest” is an indicator that measures the total amount of Bitcoin futures contracts that are currently open in the market.
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Now, here is a chart that shows the trend in the Bitcoin open interest over the past year:The indicator's value seems to be trending up | Source:As you can see in the above graph, the Bitcoin open interest has been going up, despite the price moving down. This is different from the trend around the $69k top as there longs made up the majority and hence the open interest followed the price.
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The higher percentage of futures contracts looks to be short holders this time as the indicator has been moving opposite to the price.BTC Estimated Leverage Ratio Continues To Reach New Highs
Another metric, the “Estimated leverage ratio,” measures the average amount of leverage that each futures holder is making use of.
This indicator has been making new highs recently, suggesting that short holders are taking a lot of leverage risk right now. The below chart shows this trend.Leverage in the market moves up | Source:Such a large amount of leverage has historically lead to a flush sooner or later. And since this time the derivatives market is dominated by short holders, a short squeeze event could take place.
At the time of writing, Bitcoin’s price floats around $41.6k, down 12% in the past week. Below is a chart that shows the trend in the price of BTC over the last five days.
BTC's price has moved sideways in the last few days | Source:
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com