August 9, 2022

On-chain information reveals the Bitcoin open curiosity is sharply rising, an indication {that a} lengthy squeeze could also be brewing within the crypto futures market.

Bitcoin Open Curiosity Has Noticed Rise Lately, Whereas Funding Charges Stay Optimistic

As identified by an analyst in a CryptoQuant submit, the futures market could also be heading in the direction of an extended squeeze within the close to future.

The “open curiosity” is an indicator that measures the full quantity of Bitcoin futures positions presently open on derivatives exchanges. It consists of each lengthy and quick positions.

An rising worth of the metric suggests customers are opening extra positions proper now. Such a pattern can result in greater volatility within the crypto’s value.

However, a lowing open curiosity can imply positions on exchanges are closing down. A speedy swing within the value may cause a mass liquidation, sharply taking the indicator’s worth down.

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These liquidations cascade collectively, amplifying the worth transfer. Such an occasion is known as an extended or quick liquidation “squeeze” (relying on the course of the worth change).

Now, here’s a chart that reveals the pattern within the Bitcoin funding charges over the previous couple of weeks:

Seems to be like the worth of the metric has moved up not too long ago | Supply: CryptoQuant

As you possibly can see within the above graph, the Bitcoin open curiosity has noticed a big improve in the previous few days.

The chart additionally consists of the info of one other indicator, the “funding charges.” This metric measures the periodic charge that futures merchants should pay one another.

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A optimistic worth reveals there are extra lengthy merchants available in the market in the meanwhile as they’re paying a premium to maintain their positions.

Quite the opposite, a unfavorable worth implies a brief sentiment is dominant proper now. Wanting on the graph, it looks like the Bitcoin funding price is optimistic presently.

Because of this many of the latest improve within the open curiosity needs to be due to new lengthy positions opening.

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Traditionally, a really excessive open curiosity has normally resulted in a liquidation squeeze. Since longs are dominant proper now, an extended squeeze is possible if the worth observes a steep decline.

BTC Worth

On the time of writing, Bitcoin’s value floats round $30.5k, up 1% within the final seven days. Over the previous month, the crypto has misplaced 21% in worth.

The under chart reveals the pattern within the value of the coin during the last 5 days.

Bitcoin Price Chart

The worth of Bitcoin appears to have surged previous the $30k mark | Supply: BTCUSD on TradingView
Featured picture from Unsplash.com, charts from TradingView.com, CryptoQuant.com