Bitcoin On The Brink? Analyst Predicts Soaring Open Interest May Signal 20% Price Correction

Samuel Edyme

1 year ago

3 mins read

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Bitcoin’s open interest—the total number of outstanding derivative contracts that have not been settled—has surged to levels not seen in over six months. Amid these high-interest levels, market analysts warn that Bitcoin may see a 20% price correction.

Analysts Weigh In On Market Implications

The surge in open interest has been linked to a substantial increase in derivatives market activity. Financial commentator Tedtalksmacro hinted at the potential market shifts, noting a significant addition to open interest, which could indicate impending “fireworks” in the market.

Almost 10k BTC (~$350MM USD) in open interest added today.

Fireworks soon.

— tedtalksmacro (@tedtalksmacro) November 7, 2023

With more than $16 billion in open interest recorded currently, according to data from CoinGlass, the market is witnessing noticeable fluctuations that could spell out more significant changes in Bitcoin’s valuation.

So far, analysts are keenly observing these fluctuations, interpreting them as signals for future market movements. James Van Straten from CryptoSlate pointed out the record open interest in the CME exchange, often “preferred by institutional investors.” The analyst noted:

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.

With Binance’s open interest slightly surpassing the CME’s figures, Van Straten suggests that this trend could indicate a growing interest in Bitcoin futures, which may reflect a “positive shift” in market sentiment or a strategic move by investors to adopt “protective strategies.”

The implications of this rising open interest, however, are not universally seen as positive. J. A. Maartunn from CryptoQuant cautioned that such high open interest levels have historically preceded price drawdowns of at least 20% for Bitcoin.

This pattern, he argues, warrants “significant attention” as it could indicate an upcoming price correction.

Bitcoin Latest Price Action

The current trajectory of Bitcoin’s market performance has been discussed among analysts, particularly in light of the recent surge in open interest. Despite this interest, Bitcoin has experienced a slight pullback from its recent growth spurt.

At the time of writing, the cryptocurrency has seen a 1% decrease over the last day, now valued at $34,722. Meanwhile, over the last week, Bitcoin’s growth has been modest, charting a 1.4% increase, while the bi-weekly figures show a slightly 3.1% rise.

Bitcoin (BTC) price chart on TradingView — Bitcoin (BTC) price is moving sideways on the 4-hour chart. Source: BTC/USDT on TradingView.com

This corrective movement in Bitcoin’s price is mirrored by a notable drop in its daily trading volume, which has fallen sharply from last week’s high of $21 billion to a current figure of just $3.8 billion within the past day. This reduction in volume may be indicative of a cooling off in trading activity.

Featured image from Unsplash, Chart from TradingView

Samuel Edyme

Meet Samuel Edyme, Nickname - HIM-buktu. A web3 content writer, journalist, and aspiring trader, Edyme is as versatile as they come. With a knack for words and a nose for trends, he has penned pieces for numerous industry player, including AMBCrypto, Blockchain.News, and Blockchain Reporter, among others.

Edyme’s foray into the crypto universe is nothing short of cinematic. His journey began not with a triumphant investment, but with a scam. Yes, a Ponzi scheme that used crypto as payment roped him in. Rather than retreating, he emerged wiser and more determined, channeling his experience into over three years of insightful market analysis.

Before becoming the voice of reason in the crypto space, Edyme was the quintessential crypto degen. He aped into anything that promised a quick buck, anything ape-able, learning the ropes the hard way. These hands-on experience through major market events—like the Terra Luna crash, the wave of bankruptcies in crypto firms, the notorious FTX collapse, and even CZ’s arrest—has honed his keen sense of market dynamics.

When he isn’t crafting engaging crypto content, you’ll find Edyme backtesting charts, studying both forex and synthetic indices. His dedication to mastering the art of trading is as relentless as his pursuit of the next big story. Away from his screens, he can be found in the gym, airpods in, working out and listening to his favorite artist, NF. Or maybe he’s catching some Z’s or scrolling through Elon Musk’s very own X platform—(oops, another screen activity, my bad…)

Well, being an introvert, Edyme thrives in the digital realm, preferring online interaction over offline encounters—(don’t judge, that’s just how he is built). His determination is quite unwavering to be honest, and he embodies the philosophy of continuous improvement, or “kaizen,” striving to be 1% better every day. His mantras, “God knows best” and “Everything is still on track,” reflect his resilient outlook and how he lives his life.

In a nutshell, Samuel Edyme was born efficient, driven by ambition, and perhaps a touch fierce. He’s neither artistic nor unrealistic, and certainly not chauvinistic. Think of him as Bruce Willis in a train wreck—unflappable. Edyme is like trading in your car for a jet—bold. He’s the guy who’d ask his boss for a pay cut just to prove a point—(uhhh…). He is like watching your kid take his first steps. Imagine Bill Gates struggling with rent—okay, maybe that’s a stretch, but you get the idea, yeah. Unbelievable? Yes. Inconceivable? Perhaps.

Edyme sees himself as a fairly reasonable guy, albeit a bit stubborn. Normal to you is not to him. He is not the one to take the easy road, and why would he? That’s just not the way he roll. He has these favorite lyrics from NF’s “Clouds” that resonate deeply with him: “What you think's probably unfeasible, I've done already a hundredfold.”

PS—Edyme is HIM. HIM-buktu. Him-mulation. Him-Kardashian. Himon and Pumba. He even had his DNA tested, and guess what? He’s 100% Him-alayan. Screw it, he ate the opp.

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