As reported by The Block, open interest in Bitcoin futures has surged since Donald Trump’s election.
Bitfinex analysts see this as a “natural growth” and are not worried about a market correction despite the increase in leverage.
Since Donald Trump won the U.S. presidential election on November 5, open interest in Bitcoin futures has risen sharply, indicating an increase in trading activity and market speculation. Despite this surge, analysts at Bitfinex insist that leveraged trading is not at risk of an impending market correction.
According to Coinglass data, the open interest in Bitcoin futures surged from $39 billion on November 5 to the current $60.9 billion. This represents a significant increase in the value of positions related to Bitcoin derivatives, many of which involve leverage.
Bitfinex analysts explained to The Block that the increase in open interest appears to be natural, primarily due to expectations of future price increases. “The increase in leverage is a common tool for traders, including institutions, used to position for anticipated price movements,” they said.
They also noted that as of November 22, open interest has slightly decreased, particularly at the $94,000 level where a large number of orders were filled. “We do not believe that the recent increase in leverage is unusual. A price retest of the $93,000 area is a normal correction,” the analysts added.
Bitget CEO Gracy Chen believes that Trump's election victory acted as a catalyst for increased market leverage. “The high leverage in the market shows that investors are starting to assess the market based on technical and regulatory improvements, and the surge in open interest is a good sign, indicating that Bitcoin can thrive in Trump's environment,” Chen told The Block. However, Chen also pointed out that due to Bitcoin's inherent volatility, price corrections (possibly in the form of long position squeezes) are likely, which helps stabilize the market when leverage is excessive.
Ethereum outperformed Bitcoin over the past week.
After the latest PCE price index release, Bitcoin has broken back above the $95,000 level, with Ethereum performing notably. Ethereum rose over 5% on November 27, reaching a high of $3,600, with analysts pointing out that capital is shifting from Bitcoin to Ethereum.
“The market share of Bitcoin has declined from a high of 61.5%, while the ETH/BTC trading pair remains strong at 0.03760, up 17.8% from last week,” noted analysts at QCP Capital. They believe that Ethereum is testing the level of 0.0400, indicating a continued strength relative to Bitcoin.
Ethereum exchange-traded funds (ETFs) also experienced strong inflows, increasing by $90.1 million on Wednesday, marking four consecutive days of gains. “Ethereum's recent strength supports the case for retesting its all-time high of $4,868, which has a potential upside of 35.4% compared to current levels,” added analysts at QCP Capital.
According to TokenInsight data, the total market capitalization of the global cryptocurrency market increased by 2.1% in the past 24 hours, reaching $3.4 trillion. Bitcoin still dominates the market with a share of 54.7%, while Ethereum accounts for 12.4%.
