- Trading Volume and Its Impact on Volatility
- Hidden Signs Spell Promise
- Bitcoin’s Price and How It’s Impacted by Open Interest
Bitcoin’s price has been on a rollercoaster throughout the past few days, but it appears that, at least for now, the bulls have the upper hand. They were successful in reclaiming the important technical and psychological level of $60K and are currently attempting to push BTC above $61,000.
Trading Volume and Its Impact on Volatility
Typically, more volatility is associated with more trading volume. However, it's worth noting that trading volume can be a reactionary metric—a function of volatility. Trading volume on weekends is traditionally lower than on weekdays, which affects another metric called market depth. For example, recently, the BTC price dropped from above $62,000 to below $57,000 during the weekend. Currently, the 24-hour volume is around $25 billion, which is in line with the average.
Hidden Signs Spell Promise
Another interesting metric to consider when gauging the possibility of a future price movement is Bitcoin’s funding rates. These rates are used to determine whether buyers or sellers are executing their orders more aggressively. Funding rates impact spot prices as well. Recently, funding rates on some exchanges have even turned negative, indicating potential volatility in the coming days, especially with increased trading volumes.
Bitcoin’s Price and How It’s Impacted by Open Interest
Another important metric that may play a role in the formation of larger moves during the weekend is Bitcoin’s open interest. It shows the sum of all open positions, regardless of whether they are long or short. Large or increasing open interest typically precedes volatility. Data shows that in the past 24 hours, there has been a 1.7% increase in perpetual contracts OI and a 0.2% increase in futures contracts.
These are three things worth considering in the coming days to avoid surprises and potentially find new opportunities.
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