Bitcoin Breaks $66,000, But Analyst Warns Against Fresh Longs—Here’s Why
2024年9月28日 - 8:00PM
NEWSBTC
Bitcoin has shown bullish momentum during the past day, but an
analyst has pointed out how the asset may be in a high-risk zone
now due to the Open Interest trend. Bitcoin Open Interest Has Seen
A Rapid Increase Recently As explained by CryptoQuant community
manager Maartunn in a new post on X, the Bitcoin Open Interest has
just surged to high levels. The “Open Interest” is an indicator
that keeps track of the total amount of BTC-related positions
currently open on all derivatives exchanges. Related Reading: Shiba
Inu Rallies 34%, But Will FOMO End The Rally? When the value of
this metric rises, it means the investors are opening up fresh
positions on the derivatives market right now. As the overall
leverage in the sector increases when this trend occurs, it can
lead to higher asset price volatility. On the other hand, the
indicator heading down suggests the derivatives contract holders
are either closing up positions of their own volition or getting
forcibly liquidated by their platform. This kind of trend can lead
to more stability for BTC. Now, here is a chart that shows the
trend in the Bitcoin Open Interest over the past year: As displayed
in the above graph, the Bitcoin Open Interest had cooled off to
relatively low levels earlier in the month as the asset’s price
crashed. With the recovery in the coin, however, the indicator has
been noting growth again. The indicator is now high, potentially
implying the market has become overleveraged. As mentioned earlier,
a high metric value can lead to more volatility for BTC. The reason
behind this is that mass liquidation events can become more
probable to occur at these levels, making the price act more
volatile. On paper, the volatility emerging from an Open Interest
increase can take the coin in either direction, but BTC has shown a
consistent pattern in the past year. As the analyst has highlighted
in the chart, the indicator entering into the same zone as now has
generally turned out to be bearish for Bitcoin in this window.
Related Reading: Render (RENDER) Shows 23% Surge As Sharks &
Whales Continue To Buy In these instances, the Open Interest surge
had occurred alongside price surges, indicating that long positions
had been piling up. The latest growth in the indicator has also
naturally come similarly. “We’re in a high-risk zone, and in my
opinion, it’s not the best time for fresh long positions,” notes
Maartunn. It remains to be seen how Bitcoin develops in the coming
days and if it will hit the top, just like it did during those
other instances. BTC Price Following the rally in the past day,
Bitcoin has managed to find a break above the $66,000 level for the
first time in almost two months Featured image from Dall-E,
CryptoQuant.com, chart from TradingView.com
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