IMG-LOGO

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

News Feed - 2024-08-16 02:08:42

Martin Young3 hours agoBitcoin has room to fall amid ‘unusual’ open interest — CoinGlassTotal open interest on Bitcoin futures hit $29 billion on Aug. 16 despite Bitcoin’s price decline.1603 Total views7 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTCOINTELEGRAPH IN YOUR SOCIAL FEEDFollow ourSubscribe onBitcoin 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. 


In an Aug. 16 X post, CoinGlass noted that it was “a bit unusual” that open interest has not reacted to Bitcoin (BTC) prices.“I think there is room to fall.”


The platform reported that the total OI on Bitcoin futures 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 futures 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.Bitcoin price declines as OI increases. Source:CoinGlass


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, resulting in BTC dumping 20% 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:Bitcoin critical indicator prints ‘bearish cross’ as it sinks below $58K


The end of the week also has a crypto options expiry event, with Aug. 16 seeing around 24,000 BTC contracts expire with a notional value of $1.4 billion, according 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 prices have declined 3% over the past 12 hours to trade just above the $58,000 level during early trading on Friday, Aug. 16.


Magazine:How Chinese traders and miners get around China’s crypto ban# Bitcoin# Derivatives# Bitcoin Futures# Bitcoin OptionsAdd reaction