Bitrabo Editorial
Recent data indicates that the Open Interest for Bitcoin has been rising, suggesting an upcoming increase in price volatility.
Significant Growth in Bitcoin Binance Open Interest
An analyst from CryptoQuant has pointed out that the Bitcoin Open Interest on Binance has climbed to $28.3 billion. This “Open Interest” metric tracks the total number of open Bitcoin-related positions on a platform.
A rise in this metric indicates that investors are establishing new positions, which typically results in higher leverage and increased potential for volatility in Bitcoin’s pricing.
Conversely, a decline in Open Interest reveals that holders may be closing their positions voluntarily or getting liquidated. A drop in Open Interest generally leads to greater price stability due to reduced leverage.
The following chart illustrates the changes in Bitcoin Open Interest on Binance over the past year:
The graph indicates a recent upward trend in Bitcoin Open Interest on Binance, pointing to increasing speculative activity among traders.
More precisely, the Open Interest has seen a rise of approximately $6.8 billion over the last few weeks, reaching around $28.3 billion, which is close to the all-time high noted earlier this year.
This uptick in Open Interest suggests potential price volatility for Bitcoin. Although such trends can result in significant price shifts in either direction, previous increases in Binance Open Interest have typically led to bearish outcomes for Bitcoin, as noted in the analysis.
Past spikes in Open Interest have frequently resulted in a high number of long liquidations, known as a long squeeze. In such scenarios, mass liquidations contribute to the price movement that initiated them, prolonging the price change and triggering additional liquidations.
The Funding Rate is a crucial indicator for understanding which side of the derivatives market might experience a squeeze. It tracks the periodic payments between traders in the derivatives market.
The chart shows a positive Bitcoin Funding Rate recently, indicating that long positions are currently incurring costs to short positions, which means the market is leaning toward longs.
With more positions on one side, the likelihood of mass liquidations increases, signaling the potential for a long squeeze if volatility strikes.
Current BTC Price Status
Currently, Bitcoin’s price is around $63,500, reflecting an increase of nearly 10% within the past week.