CoinGlass Data Reveals that Bitcoin Has Room to Fall Based on Open Interest
Analytical platform CoinGlass revealed that Bitcoin might still have more room to fall as its open interest surges. In a post on X, Coinglass noted that it's unusual that Bitcoin's open interest (OI) has continued to rise despite declining prices.
What is a bit unusual is that open interest has not reacted to price and has been rising.
An increase in open interest means that both long and short positions are increasing.
I think there is room to fall.
Not financial advice.
https://t.co/7uAJeu6k6Y pic.twitter.com/x2yYIFaM3C
- CoinGlass (@coinglass_com) August 16, 2024
The report revealed that total open interest in Bitcoin futures has increased over the past week, hitting $29 billion on August 16, even though BTC spot prices declined by 5% on August 14.
CoinGlass Optimistic About Bitcoin's Chances Despite Price DeclineOpen interest shows the number of future Bitcoin contracts that have yet to be settled or expired. According to CoinGlass, a rising open interest suggests that short and long positions are increasing.
Also, the rising OI gives traders more leverage in the market and can increase their exposure to either buy or sell trades. The OI increased on August 5, leading to leverage flush-outs that resulted in a 20% increase in Bitcoin prices in less than 24 hours.
CoinGlass also reveals thatBitcoin's funding rateswere negative. Such negative funding rates in the derivatives market imply that the contract price is below the asset's spot price.
Such a situation discourages traders from holding long positions, forcing them to focus more on short or sell trades.
Meanwhile, a significant crypto options expiry event will happen this week. According to data from Deribit, approximately 24,000 BTC contracts valued at $1.4 billion expired on August 16.
However, it may not be a death sentence for crypto prices as such events do not often strongly affect the spot crypto market. Moreover, a high build-up of over-leveraged trades exerts a greater influence when they get flushed out.
BTC currently trades in the $58,000-$59,000 range, having declined 3% in the last 24 hours.
Analysts Identify Possible Reasons for Bitcoin's Slump, Share PredictionsA seasoned analyst, Mags, stated that Bitcoin printed a bearish cross on the daily chart. Its 50-moving average (MA) crossed below the 200 MA, displaying short-term weakness in the crypto market.
#Bitcoin just printed a bearish cross on the daily chart, with the 50 MA crossing below the 200 MA, signaling short-term weakness in the market.
This is the second bearish cross since the $15,500 bottom.
The last bearish cross was in September 2023 when the price was... pic.twitter.com/WXAhSYsRbW
- Mags (@thescalpingpro) August 15, 2024
Mags says this is the second bearish cross since the $15,500 bottom. The last bearish cross recorded occurred in September 2023, when Bitcoin traded at around $25,000.
Mags stated that Bitcoin's price moved sideways after the pullback for some weeks before a bullish cross occurred. Meanwhile, another analyst, Tony Sycamore, noted that Bitcoin dropped to $57,478 due to concerns that the US Government was preparing to sell.
#Bitcoin trades lower at $57,478 on concerns the US Government is preparing to sell the Bitcoins it seized during the Silk Road raid.
It needs to reclaim the 200-day moving ma at $62,432 to stabilise and open up a test of trend channel resistance near $70k.
Aware that a... pic.twitter.com/lMCYbOzXOU
- Tony Sycamore_IG (@Tony_Sycamore) August 16, 2024
Sycamore claims that the US government is preparing to sell off its BTC seized during the Silk Road attack. This selloff could lead to significant declines in Bitcoin. Therefore, BTC must reclaim the 200-day MA at $62,432 to find stability and get a new resistance channel near $70,000.
However, Sycamore claims a sustained break below the $53,000-$50,000 support will cancel the bullish trend.
Meanwhile, another crypto analyst, Moustache, claims that Bitcoin's current cycle mirrors a 2017 pattern. In 2017, BTC performed healthier than its dramatic surge in 2021. The analyst believes BTC's performance in the current cycle is healthy, just like it did in 2017.
This is the bull market line that nobody is talking about.
It has been very important since the first cycle.
This cycle looks so much like 2017.
I'm slowly recognising a pattern:
-Rising fast (2013)
-Rising healthy (2017)
-Rising fast (2021)
-Rising healthy (2024) pic.twitter.com/bTiq5v1U6t-
(@el_crypto_prof) August 15, 2024
The post CoinGlass Data Reveals that Bitcoin Has Room to Fall Based on Open Interest appeared first on The Tech Report.