It has been interesting to see the open interest in bitcoin over the past few weeks. Spikes and dips appeared and disappeared just as quickly, usually following the price of the digital asset itself. Last week was no different, given the movement. Bitcoin-denominated open interest has fallen after hitting new all-time highs in previous weeks. This indicates a sharp change in investor sentiment after the roller coaster of last week.
Open Interest in Bitcoin Drops by 25,000
Back in early June Bitcoin reported that the short squeeze may have been the cause of the rally that sent bitcoin up about $30,000 in the last days of May. This was due to the fact that by this point, open interest had skyrocketed to a new all-time high of 307,189 BTC. This was well received by the market due to more investors returning to profits, but it looks like the market is now recovering.
| US macro pressure is responsible for the entire Bitcoin downtrend
Bitcoin-denominated open interest has been declining in the past week. As a result, 25,000 BTC were wiped from the market within seven days. This led to a sharp drop in open interest and, as always, a similar movement was recorded in the price of the digital asset.
The decline resulted in total open interest at the close of the market on Monday at 292,171 BTC. This was followed by a drop in the price of BTC back below $29,000. Since then, the value of bitcoin has returned, but open interest has lagged behind.
Open interest takes a nosedive | Source: Arcane Research
This is interesting considering that open interest hit another all-time high on Monday night just before the crash. Before the crash, it broke the previous week’s high and hit 317,734 BTC. Given that the same trend was recorded in the previous week, it can be assumed that investor sentiment remains unstable.
The most significant decline in open interest denominated in bitcoin was recorded on the FTX crypto exchange. Most of the drop came from here, where the exchange saw a 15.5% drop in open interest in just four hours. Other crypto exchanges will follow, albeit to a lesser extent.
Binance, the leading cryptocurrency exchange, showed open interest fell 10.6% over the same period. It was followed closely by crypto exchange Bybit, whose open interest dropped by 9.1% in a total of four hours.
BTC loses momentum ahead of US trading hours | Source: BTCUSD on TradingView.com
Interestingly, Bybit, which recorded the lowest drop in open interest, experienced the most impact on its funding rates. Even though Binance and FTX were bigger, it was Bybit traders who saw the capitulation event at its worst.
| Bitcoin Miner Earnings Remain Low as Price Drop Continues
Open interest is expected to recover over the next week, given interest in Bitcoin perpetuals. However, the likelihood of digital assets remaining high remains low given recent trends.
Featured image from SciTechDaily, charts from Arcane Research and TradingView.com
To follow Best Oui on Twitter for market insights, updates and random funny tweets…
Credit : www.newsbtc.com