The abnormal increase in Bitcoin’s open interest has stunned market participants without any significant change in price movements.
Bitcoin’s (BTC) open interest (OI) has increased significantly in recent days, but its price movements have remained almost flat, leaving many market participants baffled.
Open interest refers to the total number of derivative contracts outstanding, and increasing open interest generally indicates increased market participation. However, such an increase without a significant change in prices is unusual.
Although Bitcoin’s open interest has increased significantly in recent days, its price has not changed much. The similar trend observed in Ethereum and Solana’s open interest has stood out as another factor that increases the mystery of the market.
It was estimated that institutional investors or large organizations are preparing for a significant market event. Instead of making large transactions in the spot market at the moment, they may be increasing their positions in the derivatives market in order not to create uncertainty.
Market professionals may choose to increase their positions before the price increases if they have access to important information, for example, regulatory news, ETFs or major partnerships.
Bitcoin investors may be preparing for a drop
Additionally, another logical explanation for the increase in open interest is hedging to reduce risks. Large Bitcoin investors may be purchasing options and futures contracts to protect against potential downside risks.
This increases open interest as traders indirectly purchase Bitcoin, with minimal impact on the spot price.
Finally, an increase in open interest without a price increase could indicate a short squeeze. If increasing open interest indicates that many short positions have been opened, there may be a need to close shorts quickly when the market moves against them.
This creates buying pressure on the price as investors try to close their positions.
Stay tuned for new information.
