Bitcoin (BTC) fell toward $34,500 on Nov. 7 as analysts’ attention turned to mushrooming open interest.
Open interest “surge” spooks Bitcoin pundits
The largest cryptocurrency lacked clear direction into the Wall Street open, but market participants predicted that volatility would soon return.
The reason, they said, was a sharp increase in open interest (OI) on derivatives markets.
“Almost 10k BTC (~$350MM USD) in open interest added today. Fireworks soon,” financial commentator Tedtalksmacro predicted on the day.
As Cointelegraph reported, open interest reaching elevated levels has coincided with bouts of volatility in recent months.
Commenting on current levels, which totaled nearly $15.5 billion at the time of writing per data from CoinGlass, James Van Straten, research and data analyst at crypto insights firm CryptoSlate, described the fluctuations as “noticeable.”
“The CME exchange, preferred by institutional investors, has achieved a new record in open interest, with 105,380 BTC contracts open, valued at $3.68 billion. Binance has edged past this figure with open interest of approximately 113,500 BTC,” he noted.
“This trend points to increasing involvement in Bitcoin futures, hinting at either a positive shift in market mood or a move towards protective strategies by investors.”
The sense of uncertainty over how the OI phenomenon would polay out was shared by J. A. Maartunn, a contributor to on-chain analytics platform CryptoQuant.
Bitcoin – Low Timeframe
— Maartunn (@JA_Maartun) November 7, 2023
In analysis the day prior, he suggested that OI was now in territory which had previously seen 20% BTC price drawdowns.
“Historically, whenever this metric surpassed $12.2 billion, it resulted in a minimum 20% decline in bitcoin price,” he wrote on X, saying that OI deserved “significant attention.”
Analysis: $36,000 BTC price “off the table” this week
Continuing the coverage, popular trader Skew referenced the significance of current price levels on low timeframes.