U.Today – Bitcoin‘s open interest has skyrocketed to an incredible $70 billion, setting a new record for derivatives activity. This spike in open interest indicates that there is more market activity and that traders are setting up for big price movements. Bitcoin’s surge to $98,000 is reflected in a steady increase on the open interest chart.
With futures traders placing bets on both upward and downward price movements, this degree of open interest usually indicates increased speculative activity. This raises the possibility of increased volatility even though it might also be an indication of confidence in Bitcoin’s momentum.
According to the price chart that is provided, Bitcoin has broken out of its previous downward channel and is still moving strongly upward. There is noticeable resistance at the $100,000 psychological level, and the asset is presently trading close to $98,000. A break above this milestone might open the door for a short-term test of $105,000 or even $110,000 if Bitcoin can maintain its bullish trend.
The surge of open interest though has two drawbacks. Positively higher open interest indicates more trading volume and liquidity, both of which are essential for maintaining price movements. On the other hand, excessive leveraged position length may result in abrupt corrections brought on by cascading liquidations. This was observed in prior rallies when a derivatives market that was overheating was followed by sudden price drops.
The $85,000 and $72,000 support levels are worth keeping an eye on because they correspond with moving averages and prior consolidation zones.
This article was originally published on U.Today
