This Bullish Divergence Is Once Again Forming For Bitcoin, Rally Soon?
October 19 2023 - 11:00AM
NEWSBTC
Data shows a divergence is forming between Bitcoin and Ethereum’s
open interest, something that has been bullish for BTC in the past.
Bitcoin Open Interest Has Declined, While Ethereum Has Seen Rise
According to data from the on-chain analytics firm Santiment, the
BTC open interest has been going down since Monday. The “open
interest” here refers to the total amount of Bitcoin contracts (in
USD) that are currently open on the futures and options market.
When the value of this metric increases, it means that there are
more positions being opened up on derivative exchanges right now.
Such a trend can lead to increased volatility for the asset, as
more positions generally come with higher overall leverage for the
sector. Related Reading: Bitcoin Market Cap Could Rise By $1
Trillion After Spot ETFs Launch: CryptoQuant On the other hand,
decreasing values suggest the traders are either closing off their
positions or are getting liquidated. The cryptocurrency may become
calmer following this kind of trend. Now, here is a chart that
shows the trend in the open interest for Bitcoin and Ethereum over
the past month: Looks like the two metrics have been going opposite
ways in recent days | Source: Santiment on X As displayed in the
above graph, The Bitcoin open interest has observed a downtrend in
the last few days. This decline in the indicator had first started
when the fake iShares ETF announcement led to more than $100
million shorts being flushed in a flash. The metric saw a bit of a
rebound not too long after this sudden sharp liquidation squeeze
took place, but it was quick to return back toward a downward
trajectory. At the same time that this latest decline in the
Bitcoin open interest has occurred, the Ethereum open interest has
registered a rise instead. This suggests that while contracts are
closing up on BTC futures and options, the ETH side of the market
is seeing renewed interest. Interestingly, as Santiment has
highlighted in the chart, the last time this trend occurred, the
Bitcoin price benefited from an uplift. This previous occurrence of
the pattern was between September 28 and 30, and shortly after
this, the BTC price saw an increase of about 4.5%. The divergence
between the metrics of the two assets was much more pronounced back
then as compared to now; however, the scales of both the decline in
the BTC open interest and the rise in the ETH open interest were
far greater. Related Reading: This Rare Bullish Bitcoin Crossover
Could Soon Form, Quant Predicts When Nonetheless, the same general
pattern has still repeated this time, so it now remains to be seen
whether Bitcoin would see a bullish effect this time as well, and
if so, to what degree, given the lesser scale of the divergence.
BTC Price Bitcoin has gone stale during the last few days as its
price is still trading around the $28,400 mark right now. The value
of the coin has been consolidating sideways in the past few days |
Source: BTCUSD on TradingView Featured image from Shutterstock.com,
charts from TradingView.com, Santiment.net
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