Bitcoin price is currently showing a strong divergence with open interest and funding rate, suggesting that futures traders are bearish in the short term.
The market has seen a 4% drop since the Bitcoin price rose to a high of $64,448 on Monday, Oct. 7. On the 4-hour chart, BTC is currently oscillating above its 200-day moving average.
A candle close below this indicator could signal a further correction and a retest of $60,000.
Bitcoin OI surges, price falls
Bitcoin is currently trading below $62,000, but futures traders may see this price as a shorting opportunity.
BTC’s price has steadily fallen over the past four hours as its open interest (OI) has increased. In addition to OI, the funding rate remains positive and the total spot volume on exchanges, CVD, continues to decline, indicating that spot traders are also selling.
A comprehensive analysis of the above data leads to a reasonable inference: permanent buyers are currently in a state of "disbelief", which means that they are indifferent to the downward trend of prices.
CVD data shows that spot traders are active sellers, while futures directly determine price movements. Therefore, the current sentiment among futures traders is short-term bearish.
However, this particular increase in OI is a bit abnormal for Bitcoin. Bitcoin analyst and trader Byzantine General noted,
“$BTC open interest is spiraling out of control and the price isn’t even moving. $ETH and $SOL are starting to rise now too. This doesn’t make sense unless there is some inside info here.”
BTC fractal hints at liquidity rush to $57,500
Market fractals are historical repeating patterns that allow traders to identify trend direction or reversals in a chart. With this in mind, professional trader Justin Bennett highlighted a Bitcoin fractal that reflects its Q3 behavior.
Bennett said that Bitcoin is currently in a downward channel. Therefore, the liquidity rush may reach around $64,000, followed by a further decline to $60,000 at the end of October, and then to around $57,000.
The liquidity grab around $57,000 also coincides with the “golden zone” and is one of the key support areas to watch.
Bitcoin is still in “no man’s land”
As mentioned earlier, Bitcoin is currently consolidating between the price range of $62,600 and $61,800 on the 4-hour chart. A break above $62,600 could further validate the uptrend and would be in line with its high time frame (HTF) bullish structure.
Moreover, if Bitcoin settles above $62,600, it will also reclaim the bullish position above the 50-day EMA level which will further strengthen its momentum towards $64,000.
Meanwhile, independent analyst Rekt Capital believes that the weekly chart shows resistance at $64,200, but is very close to challenging the top of the descending channel and showing a higher high trend. However, the trader maintains a neutral stance and says,
“But right now, BTC is in the middle channel, in no man’s land.”
Taking all of the above into account, there is still a chance that Bitcoin could drop to $60,000 in the coming days.
While an immediate rebound from the $60,000 demand zone will be bullish, further sideways movement and consolidation around $60,000 will increase the possibility of a drop to between $57,500 and $54,000.
As Cointelegraph reported, several potential price triggers could occur throughout October.
