Bitcoin Derivatives Market Data As A Short-Term Trading Tool
As explained by an analyst in a CryptoQuant , yesterday’s price action was a good example of how the futures market influences the value of the cryptocurrency. There are two relevant indicators here. The first is the “open interest,” which measures the total amount of Bitcoin futures contracts that are currently open on all derivative exchanges.
When the value of this metric trends up, it means investors are opening up more contracts on the futures market currently. Since more contracts generally accompany increased leverage as well, the open interest going up can cause a higher amount of volatility for the BTC price.
The other metric of interest here is the “long/short liquidations,” which measures the total amount of long/short contracts (in USD) that are being forcefully closed off by exchanges as a result of investors accumulating losses that have eaten away a specific percentage of their collateral.
Now, here is a chart that shows the zoomed-in trend of the Bitcoin open interest and futures liquidations, as well as the BTC price, during the action seen yesterday:How the activity in the futures market has resulted in the price action seen yesterday | Source:In the above graph, the quant has marked how the Bitcoin open interest and futures liquidations (both long and short) related to the price of the cryptocurrency through each portion of yesterday’s burst of price action. At first, the price was going down, but the open interest was increasing in value, suggesting that short positions were piling up on the market. Then, in a sudden upwards price move, a large amount of these shorts were liquidated, which only fueled the price surge further.
BTC Price
At the time of writing, Bitcoin is trading around $22,100, down 4% in the last week.BTC continues to be stuck in a range | Source: