Bitcoin On The Brink? Analyst Predicts Soaring Open Interest May Signal 20% Price Correction
08 November 2023 - 12:00PM
NEWSBTC
Bitcoin’s open interest—the total number of outstanding derivative
contracts that have not been settled—has surged to levels not seen
in over six months. Amid these high-interest levels, market
analysts warn that Bitcoin may see a 20% price correction. Analysts
Weigh In On Market Implications The surge in open interest has been
linked to a substantial increase in derivatives market activity.
Financial commentator Tedtalksmacro hinted at the potential market
shifts, noting a significant addition to open interest, which could
indicate impending “fireworks” in the market. Almost 10k BTC
(~$350MM USD) in open interest added today. Fireworks soon. —
tedtalksmacro (@tedtalksmacro) November 7, 2023 With more than $16
billion in open interest recorded currently, according to data from
CoinGlass, the market is witnessing noticeable fluctuations that
could spell out more significant changes in Bitcoin’s valuation.
Related Reading: Crypto Forecast: Analyst Predicts ‘Santa Claus
Squeeze’ May Deliver Year-End Gains So far, analysts are keenly
observing these fluctuations, interpreting them as signals for
future market movements. James Van Straten from CryptoSlate pointed
out the record open interest in the CME exchange, often “preferred
by institutional investors.” The analyst noted: The CME exchange,
preferred by institutional investors, has achieved a new record in
open interest, with 105,380 BTC contracts open, valued at $3.68
billion. Binance has edged past this figure with open interest of
approximately 113,500 BTC. With Binance’s open interest slightly
surpassing the CME’s figures, Van Straten suggests that this trend
could indicate a growing interest in Bitcoin futures, which may
reflect a “positive shift” in market sentiment or a strategic move
by investors to adopt “protective strategies.” The implications of
this rising open interest, however, are not universally seen as
positive. J. A. Maartunn from CryptoQuant cautioned that such high
open interest levels have historically preceded price drawdowns of
at least 20% for Bitcoin. This pattern, he argues, warrants
“significant attention” as it could indicate an upcoming price
correction. Bitcoin Latest Price Action The current
trajectory of Bitcoin’s market performance has been discussed among
analysts, particularly in light of the recent surge in open
interest. Despite this interest, Bitcoin has experienced a slight
pullback from its recent growth spurt. Related Reading: Bitcoin’s
Price Tide: Could ASIC Miner Values Signal An Approaching Crypto
Surge? At the time of writing, the cryptocurrency has seen a 1%
decrease over the last day, now valued at $34,722. Meanwhile, over
the last week, Bitcoin’s growth has been modest, charting a 1.4%
increase, while the bi-weekly figures show a slightly 3.1% rise.
This corrective movement in Bitcoin’s price is mirrored by a
notable drop in its daily trading volume, which has fallen sharply
from last week’s high of $21 billion to a current figure of just
$3.8 billion within the past day. This reduction in volume may be
indicative of a cooling off in trading activity. Featured image
from Unsplash, Chart from TradingView
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