Bitcoin

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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 noreferrer nofollow">noted</a> that it was “a bit unusual” that open interest has not reacted to Bitcoin (<a href="https://cointelegraph.com/bitcoin-price" rel="noopener noreferrer nofollow">BTC</a>) prices.
<blockquote>
 “I think there is room to fall.”
</blockquote>
The platform <a href="https://www.coinglass.com/BitcoinOpenInterest" target="_blank" rel="noopener noreferrer 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" rel="noopener noreferrer nofollow">on Bitcoin futures</a><a href="https://cointelegraph.com/news/bitcoin-bulls-aim-for-72k-after-btc-futures-premium-hits-a-5-week-high" rel="noopener noreferrer nofollow"></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" rel="noopener noreferrer nofollow">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.
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 <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 noreferrer 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" rel="noopener noreferrer nofollow">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" rel="noopener noreferrer nofollow">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" rel="noopener noreferrer nofollow">has a crypto options</a><a href="https://cointelegraph.com/explained/covered-call-options-strategy" rel="noopener noreferrer nofollow"></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 noreferrer 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" rel="noopener noreferrer nofollow">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/" rel="noopener noreferrer nofollow">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

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