It has been fascinating to observe the bitcoin open interest in recent weeks. The price of the bitcoin itself is often the reason for spikes or dips. Given the volatility of bitcoin, last week was no exception. After only reaching an all-time high in the past weeks, bitcoin open interest plunged. This indicates a sudden change in investor sentiment after last week’s rollercoaster ride.
Bitcoin Open Interest Down to 25,000
Bitcoinist had reported at the start of June that bitcoin’s rally saw it climb to $30,000 within the final days of May. The reason for this was that open interest had reached a record high of 307189 BTC. This was well received in the market because more investors were able to profit from it. However, the market seems to be retracing.
U.S. Macro Pressure Responsible For Entire Bitcoin Downtrend| U.S. Macro Pressure Responsible For Entire Bitcoin Downtrend
Over the past week the open interest in bitcoin has fallen. In just seven days, 25,000 BTC was wiped from bitcoin’s market. There was a sudden drop in open interest, and a similar trend in price.
This brought down the total open market interest to 292171 BTC as of Monday’s close. The result was that the bitcoin price fell below $29,000. Although bitcoin’s value has returned, open interest was still low.
Source: Arcane Research| Source: Arcane Research
Interesting considering the fact that open interest reached a new record on Monday just prior to the crash. It had beaten the previous week’s high to touch 317,734 BTC before the crash. This suggests that investors’ sentiment is still unstable.
Check the Boards
On the FTX cryptocurrency exchange, the most dramatic drop in bitcoin-denominated open interests was observed. This is where most of the decline was caused by the exchange’s open interest falling by 15.5% in four hours. The drop would be repeated by the other crypto-exchanges but to a lower degree.
The open interest of Binance (the largest cryptocurrency exchange) fell 10.6% over the same period. Closely following Binance was the Bybit cryptocurrency exchange. It saw open interest drop by 9.1% in just four hours.
BTC's momentum is dwindling ahead of US trading hours| Source: BTCUSD on TradingView.com
Interestingly, Bybit had the greatest impact on funding rates after it had experienced the least drop in open interests. Despite the fact that Binance and FTX were larger, Bybit traders saw a greater capitulation event.
Similar reading: Bitcoin Mining Revenues Continue to Fall as the Price Decline Continues| Bitcoin Miner Revenues Stay Low As Price Decline Continues
Due to the increased interest in bitcoin perpetuals, open interest should recover over the coming week. Despite recent trends, however, there is little chance of digital assets being held high.
SciTechDaily featured image, Charts from Arcane Research and TradingView.com
Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…