During the Bitcoin (BTC) price decline, notional open interest (OI) in Bitcoin futures and perpetual futures fell from $37 billion to $30.2 billion in one month, according to data from cryptocurrency derivatives analysis platform Coinglass. , a decrease of approximately 18%. Bitcoin open interest is a key indicator of market sentiment.

Source: Coinglass

The data may appear to indicate that long positions or bullish leveraged bets anticipating price increases have been unwound over the past four weeks, but this interpretation may be only partially correct, masking a bullish undercurrent in the market.

Open interest refers to the number of active or open contracts during a specific period of time, while notional open interest is calculated by multiplying the number of units of a contract by its current spot market price, so even if the total contract volume Remaining stable, changes in asset prices can also have an impact on notional open interest, thus presenting a misleading picture of market activity. And this appears to be exactly what is happening in the Bitcoin market.

Data from Coinglass shows that open interest in BTC has remained above 500,000 BTC in four weeks. At the same time, the exchange’s perpetual contract funding rate continues to be positive, which shows the market’s bullish betting tendency.

Source: Coinglass

Stable open interest (denominated in BTC) and positive funding rates, along with a decline in notional open interest, suggest that some traders are already establishing new long positions, offsetting what other market participants have called the unwinding of bullish bets. . Cryptocurrency ETF expert Laurent Kssis of CEC Capital believes this shows traders haven’t hesitated to take long positions yet, saying:

“This assumption is indeed correct. Furthermore, as there is still a lot of uncertainty in the market, more protective strategies are being implemented. Don’t forget, the recent liquidity shakeout was enough to push the market below $60,000 . Indecisive long orders are still not dominant, but hedging accounts for a significant portion of the trade.”

A similar conclusion can be drawn from the persistent contango between futures and spot prices, widely known as the basis. Noelle Acheson, author of the e-newsletter "Crypto Is Macro Now" said in an interview with "CoinDesk":

“The basis has slipped slightly but remains attractive, so demand for long positions as part of a basis trade remains, and expectations for a breakout are building as macro tailwinds accumulate and selling pressure may soon dissipate. Formed, so investors may be accumulating strategic long positions when funding rates are low.”

Activity in spot and options markets shows upside bias

Cryptocurrency exchange Bitfinex has been a source of bullish pressure during price declines, according to Griffin Ardern, head of options trading and research at crypto finance platform BloFin. Data shows that leveraged long positions (margin longs, which involve using borrowed funds to purchase assets in the spot market) on Bitfinex have continued to increase steadily since June.

Ardern said:

“Bitfinex whales have been buying dips (in the spot market) since late June, but I have not observed similar signals in other derivatives markets.”

Source: Coinglass

Meanwhile, traders have been buying upside bets in the options market, according to trading firm QCP Capital. In a market update released on Wednesday, the company said:

"Despite the sell-off, the options market remains heavily tilted to the upside, suggesting the market is still looking for a year-end rebound. This is consistent with the significant buying interest observed by the trading desk in long-term options with $100,000/$120,000 strikes .

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