Bitcoin open interest passes $15B as analyst warns of 20% BTC price dip

    2023.11.08 | exchangesranking | 425onlookers

    Bitcoin (BTC) fell toward $34,500 on Nov. 7 as analysts’ attention turned to mushrooming open interest.

    BTC/USD 1-hour chart. Source: TradingView

    Open interest “surge” spooks Bitcoin pundits

    Data from Cointelegraph Markets Pro and TradingView showed BTC price struggling to reclaim $35,000 as support. 

    The largest cryptocurrency lacked clear direction into the Wall Street open, but market participants predicted that volatility would soon return.

    The reason, they said, was a sharp increase in open interest (OI) on derivatives markets.

    “Almost 10k BTC (~$350MM USD) in open interest added today. Fireworks soon,” financial commentator Tedtalksmacro predicted on Nov. 7.

    As Cointelegraph reported, open interest reaching elevated levels has coincided with bouts of volatility in recent months.

    Current levels totaled nearly $15.5 billion at the time of writing, per data from CoinGlass. James Van Straten, research and data analyst at crypto insights firm CryptoSlate, described the fluctuations as “noticeable.”

    “The CME exchange, preferred by institutional investors, has achieved a new record in open interest, with 105,380 BTC contracts open, valued at $3.68 billion. Binance has edged past this figure with open interest of approximately 113,500 BTC,” he noted.

    “This trend points to increasing involvement in Bitcoin futures, hinting at either a positive shift in market mood or a move towards protective strategies by investors.”
    Bitcoin futures open interest chart (screenshot). Source: CoinGlass

    The sense of uncertainty over how the OI phenomenon would play out was shared by J. A. Maartunn, a contributor to on-chain analytics platform CryptoQuant.

    In an analysis on Nov. 6, he suggested that OI was now in a territory that had previously seen 20% BTC price drawdowns.

    “Historically, whenever this metric surpassed $12.2 billion, it resulted in a minimum 20% decline in bitcoin price,” he wrote on X, saying that OI deserved “significant attention.”

    BTC/USD annotated chart with OI. Source: J.A. Maartunn/X

    Analysis: $36,000 BTC price “off the table” this week

    Continuing the coverage, popular trader Skew referenced the significance of current price levels on low timeframes.

    Related: Inordinately high: Bitcoin Ordinals send BTC transaction fees to new 5-month peak

    Whoever is “wrong” on direction, he told X followers, would face difficulties, fuelling a potentially volatile price reaction.

    Looking ahead, monitoring resource Material Indicators concluded that $36,000 would remain the ceiling for the time being.

    “Calling a local top at $36k doesn’t mean >$36k is off the table this year, but the metrics I’m looking at indicate that at the very least, it’s off the table for this week,” it said in its Nov. 6 analysis on X.

    “That call also doesn't mean price will free fall back to the prior $25k-$28.5k range, but if a bull breakout isn’t validated this month, that range low is critical.”

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