Bitcoin’s recent price volatility seems to have caused a wave of uncertainty among retail and institutional investors as Open Interest (OI) has seen a sharp decline due to several negative factors hampering the market, such as macroeconomic turmoil.
Is Bitcoin Ready for 2021 Style Performance?
In a pessimistic development, open interest in Bitcoin has fallen sharply recently, indicating a dip in 2021. Alphractal, an advanced investment data analytics company, report a negative trend in the key on-chain metric on platform X (formerly Twitter), which shows the monitoring time or reinforcement.
This reduction in open interest, a metric that calculates the number of derivative contracts such as futures or options, may mean that a trader is closing their positions due to increasing uncertainty in the current market.
The platform has seen a decrease in a key indicator similar to what happened in 2021, after analyzing 180 days or a whole year of open interest in Bitcoin all over the world. crypto exchange. “Resisting $38 billion in open interest represents a major challenge in the short term,” the platform said.
It is noteworthy that the decrease comes after a significant increase in open interest in the Bitcoin futures market since 2020, which exceeds the limit of 42 billion dollars. This increase is indicative of growing investor interest benefitespecially in large crypto exchanges.
Alphractal highlighted that the Chicago Mercantile Exchange (CME) currently controls about 26.3% of all positions, while the world’s largest cryptocurrency, Binance, controls 20.2% of the market.
According to the platform, understanding the interest of the institution will be important Bitcoin to continue upwards. This is because the open interest usually increases in line with the increase in the price of BTC. However, Alphractal noted that if the Annual Open Interest Delta enters negative territory, a bearish trend in the market may be on the horizon due to a lack of institutional interest.
BTC Starts The Week With Profits
Currently, Bitcoin is showing strong resilience, starting the week on a positive note, which has raised optimism about its potential in the short term. The crypto asset regained the $64,000 mark after falling from the level last week. Given the renewed positive sentiment and price movements, BTC they may attract more gains as bulls continue to push prices higher.
At the time of writing, BTC was trading at $64,429, showing a price growth of about 3% over the previous day. Both its market volume and trading volume also showed healthy movements in the previous day, which increased by about 2.86% and 60.60%, respectively.
Featured image from Unsplash, chart from Tradingview.com