Bitcoin’s recent price fluctuations appear to have caused a wave of uncertainty among retail and institutional investors Open interest (OI) has witnessed a significant decline in the face of several negative factors hampering the market such as macroeconomic turbulence.
Is Bitcoin Ready for a 2021-Style Performance?
In a pessimistic development, overt interest in Bitcoin has fallen sharply recently, mirroring a dip experienced in 2021. Alpharactal, an advanced investment data analytics company, reported the negative trend in the key on-chain metric on the X platform (formerly Twitter), reflecting a period of caution or consolidation.
This decline in open interest, a metric that measures the total number of derivative contracts such as futures or options, could imply that traders are closing their positions due to the increasing uncertainty in the current market.
The platform noted a reduction in the key indicator, similar to what happened in 2021, after analyzing the 180-day or annual delta of Bitcoin open interest for all countries. crypto exchanges. “The resistance of $38 billion in open interest represents a significant near-term challenge,” the platform added.
It is worth noting that the decline comes after a notable growth in open interest in the Bitcoin futures market since 2020, crossing the $42 billion threshold. This increase is indicative of increased investor interest leverespecially on larger crypto exchanges.
Alphractal highlighted that the Chicago Mercantile Exchange (CME) currently controls approximately 26.3% of all positions, while the world’s largest cryptocurrency exchange, Binance, controls 20.2% of the market.
According to the platform, understanding institutional interest will be essential Bitcoin to continue its upward movement. This is due to the fact that open interest usually rises along with an increase in the price of BTC. However, Alphractal noted that if the Annual Open Interest Delta turns negative, a bearish process in the market could be on the horizon due to a lack of institutional interest.
BTC starts the week with gains
Currently, Bitcoin is showing strong resilience and is starting the week on a positive note, which has led to optimism about its near-term potential. The crypto asset has regained the $64,000 mark after falling from last week’s levels. Given the renewed positive sentiment and price movements, BTC could yield more gains as bulls continue to push for further price increases.
At the time of writing, BTC was trading at $64,429, showing a price growth of almost 3% over the past day. Both the market capitalization and trading volume have seen healthy movement over the past day, up around 2.86% and 60.60% respectively.
Featured image from Unsplash, chart from Tradingview.com