Bitcoin's price has once again captured attention, reaching a new level of $120,000. However, there are several signals in the market indicating potential risks.
Surge in Bitcoin Interest on Binance
Open interest for Bitcoin on the Binance platform has hit an all-time high of $14.1 billion. This indicates a growing appetite for risk from both retail and institutional traders. Historically, an increase in open interest during bullish trends can fuel further price increases, as observed in the current situation with Bitcoin.
Leverage Risks in Trading
With the increase in open interest, the estimated leverage ratio on Binance has also risen, reaching 0.204 and approaching levels seen in August 2023. While a high leverage level can lead to increased gains in a stable market, it also creates significant risks. Minor price fluctuations can trigger a chain of liquidations, leading to sharp and unpredictable price movements.
Technical Analysis and Warnings of Correction
From a technical perspective, Bitcoin's price remains in a bullish trend, confirmed by the recent breakout above $120,000. However, indicators such as the Relative Strength Index (RSI) show overbought conditions, currently at 78. If the price begins to correct, key support levels will be at $120,000, $116,000, and a crucial level at $110,000.
While the price of Bitcoin has reached high levels, it is essential to consider the risks associated with increased open interest, leverage usage, and potential corrections in the market. Analyzing current conditions is critical for making informed trading decisions.
