Bitcoin Open Interest Falls To $37 Billion—Does This Spell Trouble For BTC?

Christian Encila

2 months ago

3 mins read

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Open interest in Bitcoin trading is a crucial metric to assess the market’s current sentiment on the digital asset, including potential price movements.

In theory, an increase in Bitcoin’s open interest suggests liquidity, which can also support an ongoing price trend.

According to the latest Glassnode data, Bitcoin’s OI has dipped from $57 billion to $37 billion, or a loss of 35%, since the world’s top digital asset hit its all-time high.

Interestingly, Bitcoin hit an all-time high of $108,786 on January 20th, the day United States President Donald Trump was inaugurated for a second term.

Bitcoin is trading between $83k and $86k, down more than 22% from its peak, at the time of writing.

Bitcoin Open Interest And Its Possible Impact On Price

Investors and holders use the open interest metric to assess the sentiment and potential market performance of the asset.

A digital asset with a falling open interest means that traders and investors are closing their positions due to uncertainties or lack of confidence or are moving away from leveraged trading.

Futures open interest has dropped from $57B to $37B (-35%) since #Bitcoin’s ATH, signaling reduced speculation and hedging activity. This decline mirrors the contraction seen in on-chain liquidity, pointing to broader risk-off behavior. pic.twitter.com/XPbXiHXlRS

— glassnode (@glassnode) March 20, 2025

In Glassnode’s analysis, the drop in Bitcoin’s OI reflects a broader trend of decreasing on-chain activities and liquidities, where investors have less confidence in the asset.

Bitcoin’s current status suggests that most investors are now looking at short-term trades for quick gains at the expense of long-term positions.

There’s A Shifting In Positions – Glassnode

According to Glassnode, traders and investors are now in the cash-and-carry trade, with a weakening of long positions. It adds that the CME futures closures and ETF outflows reflect a shift in investors’ strategy and also add to the selling pressure.

Also, the availability of ETFs, which have less liquidity than futures, may impact the alpha crypto’s short-term market volatility.

BTC is now trading at $84,116. Chart: TradingView

Data Highlights Hot Supply Metric

Glassnode also highlighted the asset’s Hot Supply metric. This is another important metric that tracks the Bitcoin holdings at one week or less.

According to the same Twitter/X thread, the numbers have dropped from 5.9% of the total BTC in circulation to 2.8%, reflecting a drop of more than 50% in the last three months.

The decline in the hot supply suggests that fewer new Bitcoins are traded in the market, reducing the asset’s liquidity.

Glassnode further painted a gloomy picture for Bitcoin by explaining that exchange inflows have dropped from 58,600 Bitcoins daily to 26,900 Bitcoins, a 54% decrease.

This Bitcoin trend suggests weaker demand since fewer assets are moving to crypto exchanges.

Featured image from Olhar Digital, chart from TradingView

Christian Encila

They say journalists never truly clock out. But for Christian, that's not just a metaphor, it's a lifestyle. By day, he navigates the ever-shifting tides of the cryptocurrency market, wielding words like a seasoned editor and crafting articles that decipher the jargon for the masses. When the PC goes on hibernate mode, however, his pursuits take a more mechanical (and sometimes philosophical) turn.

Christian's journey with the written word began long before the age of Bitcoin. In the hallowed halls of academia, he honed his craft as a feature writer for his college paper. This early love for storytelling paved the way for a successful stint as an editor at a data engineering firm, where his first-month essay win funded a months-long supply of doggie and kitty treats – a testament to his dedication to his furry companions (more on that later).

Christian then roamed the world of journalism, working at newspapers in Canada and even South Korea. He finally settled down at a local news giant in his hometown in the Philippines for a decade, becoming a total news junkie. But then, something new caught his eye: cryptocurrency. It was like a treasure hunt mixed with storytelling - right up his alley!

So, he landed a killer gig at NewsBTC, where he's one of the go-to guys for all things crypto. He breaks down this confusing stuff into bite-sized pieces, making it easy for anyone to understand (he salutes his management team for teaching him this skill).

Think Christian's all work and no play? Not a chance! When he's not at his computer, you'll find him indulging his passion for motorbikes. A true gearhead, Christian loves tinkering with his bike and savoring the joy of the open road on his 320-cc Yamaha R3. Once a speed demon who hit 120mph (a feat he vowed never to repeat), he now prefers leisurely rides along the coast, enjoying the wind in his thinning hair.

Speaking of chill, Christian's got a crew of furry friends waiting for him at home. Two cats and a dog. He swears cats are way smarter than dogs (sorry, Grizzly), but he adores them all anyway. Apparently, watching his pets just chillin’ helps him analyze and write meticulously formatted articles even better.

Here's the thing about this guy: He works a lot, but he keeps himself fueled by enough coffee to make it through the day - and some seriously delicious (Filipino) food. He says a delectable meal is the secret ingredient to a killer article. And after a long day of crypto crusading, he unwinds with some rum (mixed with milk) while watching slapstick movies.

Looking ahead, Christian sees a bright future with NewsBTC. He says he sees himself privileged to be part of an awesome organization, sharing his expertise and passion with a community he values, and fellow editors - and bosses - he deeply respects.

So, the next time you tread into the world of cryptocurrency, remember the man behind the words – the crypto crusader, the grease monkey, and the feline philosopher, all rolled into one.

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.