During the last Bitcoin rally, Open Interest and BTC price both hit all-time highs as Bitcoin approached the critical 100K target.
The surge in Open Interest was driven by a significant increase in leveraged positions as Bitcoin’s price climbed rapidly.
This year, the 7d percentage change in Open interest reached an all time high refelcting the sharp and powerful growth in leveraged positions.
However, as these positions grew unsustainably fast, a market correction followed and Bitcoin's price dropped by 9%, leading to a liquidation of leveraged positions.
Following this liquidation event, the 7-day percentage change in Open Interest sharply declined, approaching its low level limit.
This shift might make the market healthier, but liquidation events could occur before Bitcoin tests the 100K psychological resistance again
Historically, when this metric reached the high or low limit, a market shift happened on the short term.
Tracking the 7-day percentage change in Open Interest can serve as a helpful tool to set long or short positions.
It also provides a valuable insights into global investor behavior.
Written by Darkfost
