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Bitcoin Open Interest Shoots Up With Price Rise, Long Squeeze Brewing?

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On-chain data shows the Bitcoin open interest has been rapidly going up with the price, a sign that a long squeeze may be brewing in the market.

Bitcoin Open Interest Has Seen Sharp Rise Recently

As pointed out by an analyst in a CryptoQuant post, the funding rates are also highly positive right now. The “open interest” is an indicator that measures the total amount of Bitcoin futures contracts that are currently open on derivative exchanges. This metric accounts for both short and long contracts.

When the value of this metric displays a rise, it means BTC investors are opening up new positions in the futures market right now. Since more derivative positions generally also imply an increase in leverage in the market, this kind of trend can lead to the asset’s price turning more volatile.

On the other hand, the indicator showing a decrease suggests the holders are closing their futures positions or are getting liquidated by exchanges. Naturally, the value of the cryptocurrency can become lower following this trend.

Now, here is a chart that shows the trend in the 30-day simple moving average (SMA) Bitcoin open interest over the past week or so:

The 30-day SMA value of the metric seems to have shot up in recent days | Source: CryptoQuant

As shown in the above graph, the 30-day SMA Bitcoin open interest has observed some pretty rapid increase in the last couple of days as the asset’s price has shown sharp upwards momentum.

The metric’s value is now about $8.6 billion, which is the highest it has been since around a week ago. Interestingly, when that spike in the indicator took place, the price and the metric, both, fell sharply shortly after.

The open interest generally decreases so rapidly during mass liquidation events called “ Go to Source to See Full Article
Author: Hououin Kyouma

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