BTC Price Impacted as Bitcoin Reaches 3-Year Peak Open Interest of $22B

BTC Price Impacted as Bitcoin Reaches 3-Year Peak Open Interest of $22B

Bitcoin Futures Market Signals More Action Ahead

The Bitcoin (BTC) price surpassed $48,000 on Feb. 9, and recent activities in the derivatives market suggest that more action is expected in the coming days. The total capital stock in the BTC futures markets has exceeded the previous peak recorded during the spot ETF approval excitement on Jan. 11, leading to optimism about a potential increase in BTC price.

Bitcoin Open Interest Reaches April 2021 Levels

Since the spot ETF approval, there has been a surge of interest in BTC as an asset class, with many institutions allocating a significant portion of their portfolios to acquire BTC. However, the derivatives market has experienced even greater capital inflows. Coinglass’ open interest metric tracks real-time changes in total capital stock invested in BTC perpetual futures markets. On Feb. 12, BTC open interest reached a milestone of over $21.8 billion, its highest since March 2022.

Rapid Growth in Open Interest Signals Bullish Sentiment

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During the period between Feb. 1 and Feb. 12, BTC open interest increased by $4.5 billion (25%), surpassing the growth rate of the spot price, which only grew by 15%. Such rapid growth in open interest indicates new participants entering the market and injecting fresh capital inflows. It also signals a sense of urgency among traders to capitalize on the prevailing bullish sentiment and confidence in BTC’s fundamental drivers amidst macroeconomic conditions.

BTC Price Forecast: Bullish Target of $50,000

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Currently trading at $47,800, BTC is considered undervalued relative to the capital inflows into derivatives markets when compared to previous instances where open interest reached $22 billion. This suggests a potential bullish attempt to reclaim the $50,000 target in the coming days. However, resistance at the $48,900 territory poses a challenge for BTC bulls. If they can overcome this hurdle, a retest of the $50,000 range is likely. On the other hand, a major downswing below $40,000 seems unlikely due to strong support at $42,000.

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