Bitcoin’s breakout above $60,000 seems to have sparked a new wave of optimism among traders. After the market had been choppy for most of August following a steep decline earlier in the month, the slight increase above $60,000 was enough to inject a significant amount of capital into the market.

This is evident in the spike in open interest (OI) between August 21 and 22. According to data from CoinGlass, Bitcoin futures open interest increased from $30.21 billion to $32.08 billion in just 24 hours.

Chart showing open interest for Bitcoin futures from August 8 to August 22, 2024 (Source: CoinGlass)

Open interest is a measure of the total number or value of outstanding derivative contracts. When analyzing futures contracts, this is an important indicator because it reflects the capital inflow into the market.

An increase in open interest indicates that new money is flowing into the market as traders open new positions. Conversely, a decrease in open interest indicates that contracts are being closed or liquidated, with capital being withdrawn from the market. Monitoring open interest helps gauge market activity and predict potential price movements.

The $2 billion increase in open interest between August 21 and 22 indicates a sudden and strong inflow of capital into the derivatives market. As this increase followed Bitcoin’s breakout from $59,000 to above $60,000, it is safe to assume that this price level has broken a key psychological level, triggering a new wave of optimism among the derivatives trading community. Analysis of the distribution between calls and puts on Bitcoin options shows that traders are opening more long positions and expecting the price to continue rising.

A similar trend was observed in perpetual futures. Perpetual futures open interest increased significantly from August 21 to 22, continuing the steady increase seen in the previous weeks. By August 21, perpetual futures open interest had reached $15.66 billion – a significant increase from $13 billion on August 5.

Perpetual futures are a type of derivative that differs from traditional futures contracts in that they do not have an expiration date, allowing traders to hold positions indefinitely. This feature makes perpetual futures particularly attractive for speculative trading, as traders can take advantage of short-term price movements without worrying about the contract expiring.

Chart showing open interest for Bitcoin perpetual futures from August 5 to August 21, 2024 (Source: Glassnode)

The simultaneous increase in open interest in both traditional and perpetual futures suggests that the overall market sentiment is bullish, with both institutional and retail investors increasing their exposure to Bitcoin. Traditional futures tend to attract more institutional investors, with regulated platforms like CME recording the highest open interest and trading volume.

The increase in open interest on CME from $8.76 billion on August 21 to $9.65 billion on August 22 confirms growing interest from institutional investors. In contrast, perpetual futures are more popular on platforms such as Binance, Bybit, and OKX, which primarily cater to retail investors. The increase in open interest on these platforms, especially the sharp increase on Binance from $6.70 billion to $7.18 billion, indicates growing participation from retail investors.

The difference between traditional and perpetual futures contracts lies in their expiration dates and how they reflect market sentiment. Traditional futures contracts reflect long-term market expectations, with fixed maturities and typically higher capital requirements.

In contrast, perpetual futures are more sensitive to short-term trends due to the lack of an expiration date and the use of funding rates to maintain prices close to Bitcoin’s spot price. As a result, changes in perpetual futures open interest can signal immediate changes in market sentiment and trader positions.

The increase in open interest in both futures contracts suggests that bullish sentiment is spreading across different investor groups. The rise in Bitcoin prices also reinforces this view, apparently reflecting increased capital inflows into the market.

However, the rapid increase in open interest also raises the possibility of increased volatility. If the market fails to continue its upward trend, the large number of open positions could lead to sharp corrections as traders rush to close their positions, especially in the perpetual futures market, which is more speculative.

Source: https://tapchibitcoin.io/bitcoin-surpasses-60-000-lai-suat-mo-hop-dong-tuong-lai-tang-2-ty-trong-mot-ngay.html