Bitcoin Bullish Signal: Open Interest Shows Strong Trend Up

Keshav Verma

3 years ago

3 mins read

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After heavily decreasing during the 4th December crash, the open interest finally seems to be making a return as it gains strong upwards trend.

Bitcoin Open Interest Shows Strong Upwards Movement

As pointed out by a CryptoQuant post, the BTC open interest has reversed its trend, and is now showing sharp movement up.

The “open interest” is an indicator that measures the total amount of futures contracts still open at the end of any trading day on derivatives exchanges. The metric takes into account both long and short positions.

When the value of this indicator moves up, it can mean market volatility is rising. An increasing open interest may also support the current overall price trend. However, very large values of the metric can imply there is an excess of leverage in the market, which may end up leading to a correction in the price of the crypto.

On the other hand, a decreasing open interest value can result in lower market volatility. When the indicator sharply moves down, it can lead to a short or long squeeze due to the sudden price movement (the reverse can also be the case).

Now, here is a chart that shows the trend in the Bitcoin open interest over the past month:

Looks like the indicator has started moving up recently | Source: CryptoQuant

As you can see in the above graph, during the 4th Dec crash, the value of the Bitcoin open interest sharply dropped off.

The indictor showed some recovery shortly after, but soon the curve started to flatten. However, recently, the metric has shot up and shown some strong uptrend.

This trend may mean that whales are now returning to the Bitcoin derivatives market, which can be bullish for the price of the crypto.

BTC Price

At the time of writing, Bitcoin’s price floats around $48.8k, up 3% in the last seven days. Over the past thirty days, the coin has lost 18% in value.

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

BTC's price might have started to recover | Source: BTCUSD on TradingView

For a while now, Bitcoin has mostly showed sideways movement as the coin has been stuck between the $45k and $50k price levels. However, today BTC seems to have shifted to some strong uptrend.

But since the price is still below $50k, it’s unclear at the moment whether this change of trend can help BTC break out of this consolidation. If the open interest is anything to go by, the signs seem to be bullish.

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

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

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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