Bitcoin Open Interest Plunges 25% After Price Plummet
Data shows that the Bitcoin Open Interest has dropped by 25% following the recent crash in its price, marking the largest drop in around 1.5 years. This decrease in Open Interest could potentially signal a bottom for the cryptocurrency, according to an analyst’s post on CryptoQuant.
Key points:
– Open Interest refers to the total amount of Bitcoin positions (measured in USD) currently open on all derivative exchange platforms.
– Rising Open Interest indicates speculators opening new positions in the market, leading to increased leverage and potential volatility.
– Decreasing Open Interest suggests investors closing contracts or getting liquidated, resulting in a calmer market.
– The chart displayed shows a sharp negative spike in the percentage change of Bitcoin Open Interest, indicating a significant impact from the recent price plunge.
– Mass liquidation events, known as “squeezes,” contribute to volatility and further liquidations.
– The recent crash has wiped out over $2.5B of Open Interest, equivalent to 25% of the total.
– The market may become calmer with the decrease in Open Interest, reducing the risk of another squeeze and potentially attracting long-term investors.
– The current volatility is a departure from the previous sideways movement, but it remains to be seen if the market will remain active or return to stagnation.
Hot Take:
The significant drop in Bitcoin Open Interest following the price crash suggests a potential bottom and a calmer market. This flush of speculators could attract long-term investors who may start accumulating again. However, the future of the market remains uncertain, and it will be interesting to see if it can sustain its current activity or revert to a stagnant state.
BTC Price: $26,300 (down 10% in the last week)
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