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Breaking News: OG Bitcoin Whales Dumping Assets: Chart Reveals Significant Sell-Off Activity
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Breaking News: OG Bitcoin Whales Dumping Assets: Chart Reveals Significant Sell-Off Activity

Bitcoin On-Chain Data Signals A Long Squeeze Brewing In Futures Market

Keshav Verma
Keshav Verma
Last Updated: June 11, 2024 2:20 pm
3 mins read
Bitcoin

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On-chain data shows the Bitcoin open interest is sharply rising, a sign that a long squeeze may be brewing in the crypto futures market.

Bitcoin Open Interest Has Observed Rise Recently, While Funding Rates Remain Positive

As pointed out by an analyst in a CryptoQuant post, the futures market may be heading towards a long squeeze in the near future.

The “open interest” is an indicator that measures the total amount of Bitcoin futures positions currently open on derivatives exchanges. It includes both long and short positions.

An increasing value of the metric suggests users are opening more positions right now. Such a trend can lead to higher volatility in the crypto’s price.

On the other hand, a lowing open interest can mean positions on exchanges are closing down. A rapid swing in the price can cause a mass liquidation, sharply taking the indicator’s value down.

Related Reading | Bitcoin Bearish Signal: Whale Ratio Continues To Stay At High Value

These liquidations cascade together, amplifying the price move. Such an event is called a long or short liquidation “squeeze” (depending on the direction of the price change).

Now, here is a chart that shows the trend in the Bitcoin funding rates over the past couple of weeks:

Bitcoin Open Interest And Funding Rates

Looks like the value of the metric has moved up recently | Source: CryptoQuant

As you can see in the above graph, the Bitcoin open interest has observed a significant increase in the last few days.

The chart also includes the data of another indicator, the “funding rates.” This metric measures the periodic fee that futures traders have to pay each other.

A positive value shows there are more long traders in the market at the moment as they are paying a premium to keep their positions.

On the contrary, a negative value implies a short sentiment is dominant right now. Looking at the graph, it seems like the Bitcoin funding rate is positive currently.

This means that most of the recent increase in the open interest has to be because of new long positions opening.

Related Reading | Bitcoin Dominance Remains High As Market Sell-Offs Settle

Historically, a very high open interest has usually resulted in a liquidation squeeze. Since longs are dominant right now, a long squeeze is probable if the price observes a steep decline.

BTC Price

At the time of writing, Bitcoin’s price floats around $30.5k, up 1% in the last seven days. Over the past month, the crypto has lost 21% in value.

The below chart shows the trend in the price of the coin over the last five days.

Bitcoin Price Chart

The value of Bitcoin seems to have surged past the $30k mark | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com
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Keshav Verma
Keshav Verma

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

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Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

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