Open interest in Bitcoin derivatives has declined, possibly indicating reduced hedging and speculative trading.
Decline in Open Interest and Its Implications
Open interest, which tracks the total number of outstanding derivative contracts, decreased from $57 billion when BTC hit its all-time high to $24.5 billion. This change indicates closure of positions to reduce uncertainty and leverage unwinding. A long-term trend of decreased on-chain liquidity is amplified by the unwinding of long-side bias in cash-and-carry trades. ETF outflows add extra pressure, and notable shifts include a reduction in Bitcoin's 'Hot Supply', indicating less active trading.
Bitcoin Struggles to Regain Price Levels
Bitcoin is attempting to break the $90,000 resistance level, sparking speculation about the completion of the recent bull run. The decline in open interest coincides with falling on-chain liquidity. Exchange inflows have also decreased, possibly indicating less selling pressure but also weaker demand.
Preparing to Test Crucial Support Levels
Bitcoin is trading at $84,001 near the crucial support of $85,000. Analysts emphasize that holding this level may indicate continued uptrend. The decrease in exchange inflows suggests either reduced selling pressure or weaker demand, but institutional accumulation signals could prolong the bull market.
The drop in open interest on Bitcoin's derivatives market might signal reduced speculative interest or preparation for new market movements.
