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Open Interest of Bitcoin futures rises to all-time high – Big movement ahead?

  • Open interest in Bitcoin Futures is at an all-time high of around $5 billion.
  • Analysts therefore expect the Bitcoin price to become increasingly volatile in the short term, but an upward trend in the long run. 

Bitcoin continues with its consolidation phase. The number one cryptocurrency by market capitalization has managed to stay over $11,000 over the past few days. However, the relative stability of the BTC price, after passing the $10,000 mark at the end of July, has driven open interest in the futures market.

At the time of publication, Bitcoin is trading for $11,451 with gains of 0.83% in the last 24 hours. In the weekly chart, the cryptocurrency is recording a loss of 1.45% along with the rest of the market. However, in the monthly chart BTC remains among the biggest winners with 22.9%, after Chainlink (102.3%), Ethereum (43.7%) and XRP (40.4%).

Data from the research firm Skew shows that traders in the futures market have taken note of the low volatility in Bitcoin price. Therefore, they have opened a large number of positions that show the expectation of a possible movement of the Bitcoin price. At $5 billion, it is an indicator of increased volatility of Bitcoin in the short term, as Skew claims.

Bitcoin BTC

Source: httpss://twitter.com/skewdotcom/status/1296720725794066433

Thus, unlike in recent months, traders on the future market expect a large move in Bitcoin price, as indicated by the high open interest. As analyst Credible Crypto noted, this could push Bitcoin beyond the $12,000 resistance level to $14,000. However, similarly, BTC could fall to the critical support level of $10,500. After the collapse of the crypto market in March, Bitcoin futures also fell below $2 billion. Skew notes that Bitcoin futures contracts physically-settled show a significant increase in terms of volume, as shown below.

Bitcoin BTC

Source: httpss://twitter.com/skewdotcom/status/1298163877545496576/photo/1

Will the Bitcoin bears or bulls win?

Analysts’ predictions tend to favor the bulls. As trader Josh Rager points out, Bitcoin has had a good week because it has managed to stay above a level that had acted as resistance for years. Rager noted the following and thus made a positive prediction:

Happy with this weekly close – prior resistance that held for multiple years. Now holding as support so far. If the daily can stay above $10,500 and weekly about $11,500 – should be a continuation to upside if so.

Bitcoin BTC

Source: httpss://twitter.com/Josh_Rager/status/1297753024044183557

In the short term, Rager predicts lateral movement for Bitcoin and the main altcoins. The analyst affirms that the gap in futures contracts on the Chicago Mercantile Exchange continues to be “unexplored”, indicating expectations about future settlements of these financial derivatives. Rager stated that although the gap was “not yet closed”, any price above $10,500 should be considered bullish.

Bitcoin BTC

Source: httpss://twitter.com/Josh_Rager/status/1298151941500022784

However, the consolidation phase has no fixed date to be finish. Some analysts point to days or weeks before it ends. While it lasts, open interest will grow with the possibility of a large movement in BTC price. Therefore, the big question for investors remains when Bitcoin will fall. Trader Credible Crypto agrees with Rager that the $10,500 level will continue to act as critical support. According to him, the level around $11,100 is a good re-buy, as shown in the chart below.

Bitcoin BTC

Source: httpss://twitter.com/CredibleCrypto/status/1298161370643431425/photo/1

About Author

Reynaldo

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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