Bitcoin Open Interest Remains Elevated Post Dramatic Dip

Data show that Bitcoin open interest remains high, despite the sudden sell-off that took place a few days ago due to the COVID variant.

After the sell-off, Bitcoin open interest remains high

As per the latest weekly report from Arcane Research, the BTC open interest hasn’t fallen much in the past few days. This is in spite of the recent selloff that was triggered by the Omicron COVID version.

The “open interest” is an indicator that measures the amount of Bitcoin derivative contracts open at the end of a trading day.

The market can be dominated by excessive leverage if the metric is high. The price of cryptocurrency could experience higher volatility.

On the other hand, low values of the open interest may lead to lesser volatility as there isn’t much leverage in the market.

This chart shows how the Bitcoin indicator has performed over the past 12 months.

Bitcoin Open Interest

This suggests that the open interest is very high in recent times. Source: Arcane Research Weekly Report - Week 47| Source: The Arcane Research Weekly Update - Week 47

You can see that Bitcoin’s open interest value is still quite high despite its crash.

Although the USD has seen a decline in this metric, it is still above certain levels when denominated with BTC.

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The Bitcoin open interest currently stands at $22 billion or 380k BTC. This represents a very high price compared to historical records.

Also, as the chart shows, the indicator’s value has remained above 365k BTC for more than a month now. It’s uncommon that these kind of high values are sustained for such a long time. This could indicate that the market has excessive leverage.

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Curves are also included in the graph to show how much of Bitcoin is open for trading on the main derivatives exchanges.

Following the launch of the futures-based ETF, CME’s share in the market saw a sizeable drop. However, yesterday the exchange’s share saw a sharp increase, and now its open interest share sits at 20%.

Bybit’s open interest has seen significant growth recently. The report suggests that spikes in this exchange’s share have previously lead to sharp price fluctuations in Bitcoin so it might be worth paying attention to the upcoming trend of the exchange’s open interest.

BTC price

At the time of writing, Bitcoin’s price floats around $57.3k, up 1.3% in the last seven days. Below is a chart showing the change in Bitcoin’s price over the last five days.

Bitcoin Price Chart

 Source: BTCUSD on TradingView| Source: BTCUSD on TradingView's featured image. Charts by Arcane Research:

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