The open interest in Bitcoin has been a topic of debate over the past week, with several on-chain platforms revealing its recent record-breaking surge. However, investment analysis company Alphractal disputed that open interest in BTC had reached a new all-time high.
Interestingly enough, a prominent crypto analytics platform has put forward new data on Bitcoin’s open interest, showing that this indicator has indeed reached an all-time high over the past week. Here are the possible consequences for the price of BTC.
Are Bitcoin Traders Taking More Risks?
In a new post on the X platform, Glassnode revealed that open interest in Bitcoin across all exchanges reached a new all-time high.
Glassnode wrote on X:
Open Interest for both perpetual and fixed futures contracts recorded a new ATH of $32.9 billion this week, indicating that overall leverage in the system has clearly increased.
For context, open interest is an indicator that measures the total number of futures or derivatives contracts of a particular cryptocurrency (BTC, in this scenario) on the market at a given time. It typically provides insight into the amount of money currently invested in Bitcoin futures. The increasing open interest also signals a shift in investor sentiment and an increase in market speculation, with many traders preparing for market moves.
Source: Glassnode/X
With Bitcoin open interest rises to a new all-time high of $32.9 billion in the past week, showing fresh capital flowing into the most valuable market in the cryptocurrency industry. While the measure does not provide information on whether these new futures positions are bearish or bullish, it does indicate the likelihood of higher volatility in the market.
As Glassnode highlighted on X, there has been a significant increase in overall leverage in the Bitcoin derivatives market. From a historical point of view, the market tends to witness significant and spontaneous price movements when there is increased risk-taking behavior of traders.
This market outlook makes for an interesting next few weeks for Bitcoin’s price, which hasn’t particularly impressed in the month of October. After forming a strong bullish momentum in the previous week, the leading cryptocurrency has failed to capitalize in recent days.
BTC price at a glance
At the time of writing, the price of Bitcoin is just below the $67,000 level, reflecting a decline of 2.1% in the past 24 hours. Meanwhile, the major cryptocurrency is down by about the same figure on a weekly basis, according to data from CoinGecko.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView