Bitcoin traders flag ‘inflection point’ in key futures market metric as BTC breaks range
2024.07.29 19:19
The Bitcoin (BTC) market is at an “inflection point” after a historic Bitcoin 2024 conference that has seen BTC futures open interest break out of range, according to analysts.
“We finally have a breakout of this range,” declared independent analyst Horse, referring to Bitcoin’s futures open interest.
Open interest (OI) refers to the total number of BTC-related derivative contracts currently open on all exchanges.
A rise in this metric suggests that investors are opening new positions in the derivative market. Generally, the total leverage in the market goes up when new contracts crop up, so an increase in OI could lead to higher volatility for the asset.
Independent market analyst Horse shared the following chart showing that Bitcoin’s OI on Coinbase Pro had broken above a level that had held it down since March when BTC price hit new all-time highs.
BTC/USD chart vs. OI on Coinbase Pro. Source: Horse
Bitcoin OI had risen alongside the price as the rally was fueled by a shift in US politics toward pro-crypto narratives.
Horse referred to former US President Donald Trump’s remarks at the Bitcoin 2024 Conference in Nashville on July 27, saying that the sector was handed every bullish thing on a silver platter.
“It is debatable whether or not they actually come to fruition, but you are now a bit more obligated to be long-term bullish on this asset class either way.”
Horse explained that Bitcoin price was trading higher following Trump’s speech, as long bets in both perpetual and options markets were closed out. “This is very bullish,” he said.
“Fresh longs here are poor from an r:r basis. It definitely favors shorts or at least hedges if you went off that alone, which would be terribly stupid but worth noting. This is because the invalidation is so close, i.e., hedge 69+, close on a break of the highs.”
Fellow analyst Skew shared similar sentiments, saying that the overall Bitcoin perpetual futures market was “net long.”
Related: Bitcoin pushes toward $70K — just 6% needed for new all-time high
Skew added that “constant spot buying” would be required for the price to break to $72,000, which would cover the risks that longs currently carry.
“However, it’s pretty apparent that if spot buying stops for a bit, the direct risk of forced long de-leveraging would be pretty clear (it often ends up as a quick wick into market bid liquidity). The market is at an inflection point.”
As predicted by Skew, Bitcoin’s price has dropped lower, away from the $70,000 mark, to trade at $67,271, according to data from Cointelegraph Markets Pro and TradingView. This has resulted in the liquidation of more than $55.66 million long BTC leveraged positions over the last 24 hours, with $46.74 million liquidated over the last 4 hours alone.
Total BTC liquidations across all exchanges. Source: Coinglass
However, with Bitcoin futures OI reaching all-time highs above $39.4 billion, BTC price could soon be on track to break out to new all-time highs, making the ongoing correction could be short-lived.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
