Bitcoin’s price has risen to $20,000 once more, its highest level since 2017. The bullish momentum is also evident in short-term time frames. Many traders are wondering if the bulls can sustain current price action after the cryptocurrency lost this level in early 2022.
Bitcoin trades at $20,000. The price of Bitcoin is trading at $21,100 as of the writing. There have been a profit of 4% in the last 24hrs and a profit of 5% in the 7 days. Binance Coin (BNB), another cryptocurrency in the top 10, by market capitalization, is following Bitcoin. It has recorded an 8.8% profit during the same period.
Bitcoin Price Open Interest Hints at Fresh Bear Assault
Arcane Research data indicates that Bitcoin prices have been accompanied by increased Open Interest in derivatives. BTC futures contract volumes have increased since October’s start, due to market participants betting on cryptocurrency’s future value.
Below is a chart showing that OI in Bitcoin hit a monthly record of 464,500 BTC. The Bitcoin price has risen northwards to $20,000. OI is rising as bitcoin prices trend to the upside, indicating that traders have taken long positions.
This isn’t the first occasion this month when longs have been rushed into price action, as shown in the chart. OI soared with the Bitcoin price in September. Longs got flushed when the Bitcoin price returned back to support levels. Will history repeat that same downward move this week?
There could be a major rally in favor of Bitcoin’s price
Additional data from Arcane Research shows an increase in Open Interest when Bitcoin prices trend to the upside. The metric has been moving upwards since April 2021 when it saw a slight decrease after BTC’s price crashed from $64,000.
That year, Bitcoin reached its highest ever level. The price of Bitcoin continued to rise over the following months, but the OI moved sideways. In fact, it reached new territory when the OI test was retested. However, Bitcoin crashed, and the market entered a bearish phase, reaching the current level.
In other words: traders remained relatively stable as BTC reached $69,000 but started shorting rapidly as cryptocurrency trends to the downside. These short-sided Open Interest might be enough to fuel another bull run. Or at the very least, it could give Bitcoin enough support to recover previously lost ground.
Vetle Lunde, an analyst at Arcane Research commented on the spike in Open Interest. This could have potential consequences for Bitcoin’s price.
This is a remarkable rate of growth from May. When these positions are (unwillingly) closed, we will witness vibrant markets.