Bitcoin (BTC) is approaching its August 25 high of $65,200, a resistance level that could keep BTC in a consolidation zone for a few more weeks, according to the latest report from “Bitfinex Alpha.”
BTC prices have risen nearly 6% since the US Federal Reserve cut interest rates by 50 basis points. However, the report points out that Bitcoin's current rally is largely driven by futures trading, rather than spot market activity, raising concerns about high volatility and the risk of a correction.
Derivatives-led rally
The total value of open interest (OI) in Bitcoin futures globally has increased to $19.43 billion, surpassing the $18.93 billion level on August 25, while the price of Bitcoin remains about $1,000 lower than its recent peak. This shows that the current price movement is led by perpetuals and futures contracts, in contrast to the spot market-led rally earlier this month.
Additionally, spot buying activity has stalled as the spot cumulative delta trended sideways at $63,500. This, coupled with increased futures trading, suggests the possibility of a new range formation in the short term or a partial correction.
However, Bitfinex analysts noted that the high OI does not necessarily reflect the level of leverage that derivatives traders are using. The increase in OI could be due to investors' renewed interest in speculating on risk assets like Bitcoin after the Fed cut interest rates.
Additionally, speculative activity in altcoins has also surged, with some tokens like SUI and AAVE recording gains of up to 100% from their August and September lows. However, altcoins’ open interest has also reached a new high of $11.48 billion, up from a peak of $10.74 billion on August 19.
