Bitcoin Open Interest Hits Peak Since FTX Crash: What It Means
August 09 2023 - 11:00AM
NEWSBTC
In a market that has been relatively quiet for weeks, Bitcoin (BTC)
has suddenly sprung to life, with its Futures Open Interest (OI)
reaching levels not seen since the FTX crash. Open Interest, a
metric that measures the total number of outstanding futures that
have not been settled, provides a glimpse into the trading activity
and potential future price movements of an asset. A surge in OI can
indicate heightened trading activity and interest in the market.
Starting early Tuesday, Bitcoin’s price action surged by more than
3.5%, breaking the $30,300 mark for the second time this month.
This movement began around 5 am EST, pushing the price to a
16-day-high. The catalyst behind this surge seemed to be the rumor
that insiders at BlackRock and Invesco have confirmed that a
Bitcoin spot ETF is not a question of “if” but “when”, suggesting
an approval within the next four to six months. Related Reading:
Why Is Bitcoin And Crypto Surging Today? “Bitcoin whales opened
giga long positions at $29k,” remarked CryptoQuant CEO Ki Young Ju.
The Head of Research at CryptoQuant further added, “A lot of talk
lately about increasing probability of Bitcoin spot ETF approval in
the US. Now Coinbase premium sharply up and moving towards positive
territory (implies Bitcoin demand in the US is strengthening). GBTC
price discount has continued to narrow.” Bitcoin Futures Open
Interest Skyrockets To Yearly High Aggregate OI for Bitcoin futures
saw a significant jump, increasing by over $1 billion from the
previous day to a staggering $14.95 billion, according to Coinglass
data. This surge marks the most substantial increase in over a
month. However, derivatives activity on the CME, often seen as a
gauge of institutional trading, remained relatively unchanged in
OI, suggesting that the recent move might be predominantly
retail-driven. Miles Deutscher commented on Twitter, “Bitcoin open
interest is now at its highest level since the FTX collapse. This
indicates increased BTC trading activity from market participants.
Looks like a big move is brewing.” Similarly, James V. Straten
observed, “Bitcoin open interest is now greater than 2.25% of the
market cap, approaching YTD highs, and looks exceptionally
overheated.” The Kingfisher, a renowned data provider for Bitcoin
derivatives, noted, “Coinbase selling into every other major
exchange buying. Looks like Bybit & Bitmex degens are betting
on another $BTC leg up. While Bitfinex seems to be selling here.”
Related Reading: Will Record Low Volatility Awaken A Behemoth
Bitcoin Surge? 4,000% Signal Returns On the options front, the
analysts added that dealers seem bullish, ready to capitalize on
both upward and downward movements. Their buying activity is
currently stabilizing the price, while any significant upward
trajectory could see them intensifying their buying. Meanwhile, the
BTC liquidation map of The Kingfisher indicates that while there
are still “some late high-leverage shorts to liquidate to the
upside, but most of the short-term liquidity is down.” Renowned
analyst @52kskew provided insights into the BTC whale vs. algo
divergence, stating, “Whales require quite thick liquidity to exit
or close positions & most often this is during a squeeze event.
Some firms will use algos in order to get the best price when
closing out sizeable position (this is where TWAP algos come into
play).” CPI Release To Take Out The Heat? Notably, the Consumer
Price Index (CPI) in the US is scheduled for tomorrow, Thursday,
8:30 am EST. The release has the potential to cause a mass
liquidation of the overheated BTC futures market in both
directions. A major move by the BTC price seems imminent. Forecasts
suggest a rise in the headline CPI from 3% to 3.3% year-over-year
(YoY) for July, marking a significant transition as the positive
impacts from the prior year start to wane. Notably, the Cleveland
Fed’s Inflation Nowcast model projects a 3.42% headline CPI,
marginally surpassing general expectations. Core CPI is expected to
slightly decline from 4.8% to 4.7% YoY. At press time, the BTC
price was just below key resistance at $30,000. Featured image from
BTCC, chart from TradingView.com
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