Bitcoin

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Bitcoin’s&nbsp;open interest (OI) surged over $2 billion in just three days, leading traders to believe it may trigger a sudden “whipsaw” effect on its price.
“Bitcoin’s [had] quite the run-up in Open Interest over the past 3 days,” pseudonymous crypto trader Daan Crypto Trades noted in a June 5 X <a href="https://x.com/DaanCrypto/status/1798354840135082438" target="_blank" rel="noopener nofollow">post</a>. Open Interest is the total number of derivative contracts, such as options or futures, that have not been settled — a rise could suggest more traders are speculating&nbsp;on the asset.
BitLab Academy director Kelly Kellam explained that the <a href="https://cointelegraph.com/learn/what-is-bitcoin-a-beginners-guide-to-the-worlds-first-cryptocurrency">sudden spike in Bitcoin’s</a> OI and the continuation of positive funding rates suggest “the likelihood” of whipsaw action on the price of Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>)&nbsp;— which is when there is a sudden price spike in the opposite direction of the current trend.
“The open interest ticking up as the positive premium persists (everyone going Leveraged Long) is a recipe for a small correction BTC health check,” he <a href="https://x.com/Kellykellam/status/1798390059084775470" target="_blank" rel="noopener nofollow">added</a>.
Bitcoin’s OI jumped $2.02 billion over the three-day period, reaching $36.92 billion on June 6, <a href="https://www.coinglass.com/pro/dashboard/bitcoin" target="_blank" rel="noopener nofollow">according</a> to CoinGlass data.
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 <img src="https://s3.cointelegraph.com/uploads/2024-06/18609322-ebb0-492d-8d59-9049d014d3f1.png" alt="" title="">
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 Bitcoin OI has increased significantly over the past three days. Source: CoinGlass
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Open interest is the total number of derivative contracts that have not been settled, such as options or futures.&nbsp;
A large amount of open interest can potentially increase price swings, particularly when traders hold multiple positions and decide to suddenly adjust their strategy.
It can also influence the overall sentiment of traders who use OI as a signal to decide whether to hold or sell their crypto assets.
Related: <a href="https://cointelegraph.com/news/bitcoin-price-long-term-holders-profit-hodl-glassnode-all-time-highs">100% Bitcoin long-term hodlers are now in profit as BTC crosses $71K</a>
<a href="https://cointelegraph.com/news/bitcoin-price-72k-fuse-75k-analyst">Bitcoin’s price trades</a>&nbsp;at $70,890 at the time of writing, up 4.23% over the past seven days, <a href="https://coinmarketcap.com/currencies/bitcoin/" target="_blank" rel="noopener nofollow">according</a> to CoinMarketCap data.
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 <img src="https://s3.cointelegraph.com/uploads/2024-06/b6eab4df-a564-417f-b134-4a0aa3536260.png" alt="" title="">
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 Bitcoin is up 10.42% over the past 30 days. Source: CoinMarketCap
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Should <a href="https://cointelegraph.com/news/3-reasons-bitcoin-failed-break-above-72-k">Bitcoin’s price sharply retreat</a> by 4% to $68,000, approximately $1.96 billion in long positions could be wiped — a possibility not to be overlooked, despite the overall <a href="https://cointelegraph.com/news/bitcoin-etfs-worldwide-btc-price-71k">sentiment in the market</a>, according to pseudonymous crypto trader Jelle.
“While I’m confident Bitcoin enters price discovery soon, I’m pretty sure it won’t happen without some major volatility,” they <a href="https://x.com/CryptoJelleNL/status/1798322657630556515" target="_blank" rel="noopener nofollow">added</a>.
Magazine: <a href="https://cointelegraph.com/magazine/crypto-voters-are-already-affecting-the-2024-presidential-election/">Crypto voters are already disrupting the 2024 election — and it’s set to continue</a>
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin open interest goes meteoric, traders warn of a ‘whipsaw’

Cointelegraph

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