Cryptocurrency analytics firm Alphractal has published a new report highlighting concerns about Bitcoin’s current open interest state, emphasizing potential market risks.

Growth of Bitcoin’s Open Interest

Since 2020, the open interest in Bitcoin's futures market has impressively grown, exceeding $42 billion. This growth reflects the increasing interest in leveraged trading among investors, particularly on major exchanges. According to Alphractal, the Chicago Mercantile Exchange (CME) holds 26.3% of all positions, while Binance accounts for 20.2% of the market.

Significance of the $38 Billion Resistance Level

Alphractal notes that the $38 billion resistance level in open interest has become a significant hurdle for Bitcoin’s short-term prospects. This level marks a pivotal point, and understanding institutional activity is crucial for reversing the downturn trend.

Implications of Open Interest Reversal

Alphractal warns that if the annual open interest delta crosses into negative territory, it could signal a downturn largely driven by a lack of institutional participation. This decline could indicate that the market is experiencing a downturn similar to previous cycles, underscoring the importance of monitoring institutional interest for signs of market recovery.

Alphractal's report highlights the critical role of open interest in affecting Bitcoin’s market. Monitoring institutional activity is essential to anticipate potential short-term market shifts.