Bitcoin

when

Bitcoin may still have “more room to fall” as open interest (OI) has continued to rise amid recent price action, according to crypto analysis platform CoinGlass.&nbsp;
In an Aug. 16 X post, CoinGlass <a href="https://x.com/coinglass_com/status/1824246301497917872" target="_blank" rel="noopener nofollow">noted</a> that it was “a bit unusual” that open interest has not reacted to Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>) prices. 
<blockquote data-ct-non-breakable="true">
 “I think there is room to fall.”
</blockquote>
The platform <a href="https://www.coinglass.com/BitcoinOpenInterest" target="_blank" rel="noopener nofollow">reported</a> that the total OI <a href="https://cointelegraph.com/news/bitcoin-bulls-aim-for-72k-after-btc-futures-premium-hits-a-5-week-high">on Bitcoin futures</a><a href="https://cointelegraph.com/news/bitcoin-bulls-aim-for-72k-after-btc-futures-premium-hits-a-5-week-high"></a> reached $29 billion on Aug. 16 and has been rising all week, while spot BTC prices have declined 5% in the two days prior. 
Open interest refers to the total number of Bitcoin <a href="https://cointelegraph.com/explained/inverse-futures-contract-explained">futures</a> contracts that have yet to be settled or expire.
“An increase in open interest means that both long and short positions are increasing,” said the firm.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-08/1da6ec03-d067-401c-b286-b0461ba6697b.jpg" alt="Bitcoin has room to fall amid ‘unusual’ open interest — CoinGlass" title="">
 <figcaption style="text-align: center;">
 Bitcoin price declines as OI increases. Source: <a href="https://x.com/coinglass_com/status/1824246301497917872" target="_blank" rel="noopener nofollow">CoinGlass</a>
 </figcaption>
</figure>
Rising OI means more leverage in the market, which can amplify movements in either direction. 
This happened on Aug. 5 as leverage got flushed out, <a href="https://cointelegraph.com/news/crypto-market-crash-1b-liquidations-2024">resulting in BTC dumping 20%</a> in less than a day. 
CoinGlass data also indicates that funding rates were negative. Negative funding rates in crypto derivatives markets occur when the price of the contract is trading below the spot price of the underlying asset. 
This scenario could discourage traders from holding long positions, as they must pay to maintain these positions and incentivize more short positions.
Related: <a href="https://cointelegraph.com/news/bitcoin-price-death-bearish-cross-indicator-bullish-rally-traders">Bitcoin critical indicator prints ‘bearish cross’ as it sinks below $58K</a>
The end of the week also <a href="https://cointelegraph.com/explained/covered-call-options-strategy">has a crypto options</a><a href="https://cointelegraph.com/explained/covered-call-options-strategy"></a> expiry event, with Aug. 16 seeing around 24,000 BTC contracts expire with a notional value of $1.4 billion, <a href="https://www.deribit.com/statistics/BTC/metrics/options" target="_blank" rel="noopener nofollow">according</a> to Deribit.
However, these events usually have a limited impact on spot markets, and large leverage buildups have a greater influence when they get flushed. 
Bitcoin <a href="https://cointelegraph.com/news/bitcoin-price-death-bearish-cross-indicator-bullish-rally-traders">prices have declined 3%</a> over the past 12 hours to trade just above the $58,000 level during early trading on Friday, Aug. 16.
Magazine: <a href="https://cointelegraph.com/magazine/china-crypto-ban-investors/">How Chinese traders and miners get around China’s crypto ban</a>

Bitcoin has room to fall amid ‘unusual’ open interest — CoinGlass

Cointelegraph

Other articles published on Aug 16, 2024

Next Cryptocurrency to Explode Friday, August 16 — Injective, Sun Token, Uniswap, Convex Finance

SUI Bridge Nears Mainnet Launch: Incentive Rewards Now Available

Crypto Market Cap Hints at Major Rally: Is Another Surge Coming?

Wisconsin Investment Board Invests Further in Bitcoin Through BlackRock ETF, Exits Grayscale

Restaking on Solana Takes Shape with Renzo’s ezSOL Launch

The Best Hidden Gems Cryptos To Buy Before The Bull Run:

Join our free newsletter for daily crypto updates!