Data shows the Bitcoin Open Interest has seen a sharp increase alongside the recovery rally that the asset’s price has gone through.

Bitcoin Open Interest Has Observed A Spike Recently

As pointed out by CryptoQuant community analyst Maartunn in a new post on X, the Bitcoin Open Interest has shot up. The “Open Interest” here refers to an indicator that keeps track of the total amount of derivatives positions related to BTC that are currently open on all centralized exchanges.

When the value of this metric rises, it means that the traders are opening fresh positions on the market. As the total amount of leverage present in the sector rises when positions increase, this kind of trend can lead to more volatility in the asset’s price.

On the other hand, the indicator going down implies that the derivatives users are either closing up their positions of their own volition or being forcibly liquidated by their platforms. Such a trend may result in calmer price action for the cryptocurrency.

Now, here is a chart that shows the trend in the 24-hour percentage change for the Bitcoin Open Interest over the past month or so:

Looks like the value of the metric has been quite positive in recent days | Source: @JA_Maartun on X

As is visible in the above graph, the Bitcoin Open Interest has recently registered a sharp positive change, which suggests that investors have opened up a large number of positions inside a short window.

The impetus behind this trend is likely to be the notable price recovery that the cryptocurrency has seen during the last couple of days. Investors find rapid moves in the asset to be exciting, so they tend to participate in more speculation than normal whenever they occur.

As mentioned before, an increase in the Open Interest can lead to BTC becoming more volatile. The reason behind this is the fact that Go to Source to See Full Article
Author: Keshav Verma