Although Bitcoin's recent price performance has garnered a lot of attention, the explosive increase in open interest (OI) is the true story. Bitcoin's open interest increased by about $2 billion in the last day, indicating increased trading activity and increased investor interest in the top cryptocurrency.
The total number of active contracts in the futures and options markets is represented by open interest. An increase in OI is usually associated with higher expectations of volatility and increased participation in derivatives markets. This significant increase in OI highlights the market's increased expectation for Bitcoin's next move as the cryptocurrency is currently trading at about $102,500.
Remarkably, funding rates are still low in spite of the increase in OI. This shows that the market sentiment is balanced with neither longs or shorts taking over. When the OI is so high, a neutral funding rate may indicate that traders are being cautious and are holding off on placing strong directional bets until there is a clear move. The chart also indicates that the recent spike in Bitcoin's price has been accompanied by strong trading volume.
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This makes the argument for consistent momentum stronger. The idea that Bitcoin might once again dominate the market cycle is further supported by the fact that Ethereum (ETH) saw a minor decline in its own open interest during the same time frame. Immediate support at $97,000 and resistance at $105,000 are important levels for BTC and might determine the asset's movements in the foreseeable future.
A pullback toward the 50 EMA at $87,000 could result from a failure to hold support, while a break above the resistance could open the door for a test of $110,000. The rising price action and overall OI of Bitcoin point to a change in market dynamics, positioning the cryptocurrency to outperform other significant cryptocurrencies in the near future. To determine the strength of this trend, traders should keep a close eye on funding rates and volume spikes.
