Bitcoin Relative Open Interest Lowest Since Feb, Analyst Says “Hard To Be Bearish”
06 Maggio 2024 - 6:00PM
NEWSBTC
Data shows the Bitcoin Open Interest as a percentage of its market
cap has been at lows recently, a sign the derivatives side has been
healthy. Bitcoin Open Interest Is Now Less Than 2% Of The Market
Cap As explained by analyst James Van Straten in a new post on X,
the derivatives side of the market has looked “extremely healthy”
while BTC’s latest recovery has occurred. The metric of interest
here is the “Open Interest,” which keeps track of the total amount
of derivatives-based Bitcoin positions that are currently open on
all centralized exchanges. Related Reading: XRP Forms On-Chain
Signal That Led To 16% Crash Last Time When the value of this
indicator goes up, it means that the investors are opening up more
positions on the market right now. Generally, the total leverage in
the market rises when such a trend takes place, so the price of the
asset could end up turning more volatile following it. On the other
hand, a decline in the metric suggests users are either closing up
their positions of their own volition or getting forcibly
liquidated by their platform. The cryptocurrency may behave in a
more stable manner following such a decrease. Now, here here is a
chart that shows the trend in the Bitcoin Open Interest over the
past few years: The value of the metric seems to have been going
down in recent days | Source: @jvs_btc on X In the graph, the Open
Interest is displayed as a percentage of the asset’s market cap
(that is, the total valuation of the entire BTC circulating supply
at the current spot price). It would appear that the indicator has
registered a drawdown recently and has slipped under the 2% mark.
This would suggest that the positions on the derivatives market now
make up for less than 2% of the market cap. From the chart, it’s
visible that the metric had earlier spiked to a high as the coin’s
rally towards a new all-time high had taken place. Interestingly,
the market cap was rapidly going up in this rally, but this ratio
was still trending up, implying that speculation had been growing
at a rate faster than the price. This may have been a sign that the
derivatives side was starting to become overheated. In the drawdown
that had followed the price top, the investors had started getting
liquidated, leading to the ratio registering a decline. Related
Reading: Crypto Analyst Says Cardano “Ready For A Parabolic Bull
Run,” Here’s Why The most recent price drop had helped reset the
market further, bringing the ratio down to levels not seen since
February. Bitcoin has been mounting a recovery effort in the past
few days, but so far, the derivatives market has remained cool.
“Hard to be bearish here,” says the analyst. It now remains to be
seen if the health of the market would continue to look optimistic
in the coming days, thus potentially allowing for the recovery to
go a step further. BTC Price Bitcoin had returned back above
$65,500 earlier, but the asset has since seen a small pullback as
it’s now down to $64,100. Looks like the price of the asset has
been heading up over the last few days | Source: BTCUSD on
TradingView Featured image from André François McKenzie on
Unsplash.com, Glassnode.com, chart from TradingView.com
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