The open interest in Bitcoin over the past several weeks has been quite interesting. The highs and lows came and went at the same speed, usually following the price of the digital asset itself. Last week was no different given the movement. Open interest denominated in bitcoin has fallen after hitting a new all-time high in the previous weeks. This indicates a sharp shift in investor sentiment after last week’s roller coaster.
Bitcoin interest rate drops 25000
Back at the beginning of June, I mentioned Bitcoinist A short squeeze may have been the reason for the rally that saw Bitcoin rally around $30,000 in the last days of May. This was due to the fact that open interest had skyrocketed to a new all-time high of 307,189 BTC at this point. It has been well received in the market owing to the fact that more investors have once again plunged into profit but the market appears to be recovering now.
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Over the past week, open interest denominated in bitcoin has been declining. As a result, 25,000 BTC was wiped from the market within seven days. This saw a sharp collapse in open interest and as always, a similar movement was recorded in the price of the digital asset.
The drop brought the total open interest as of Monday’s market close to 2,92,171 BTC. What followed was the price of BTC dropping back below $29,000. Bitcoin’s value has since returned but open interest has been delayed.
Open interest takes a nosedive | Source: Arcane Research
Interestingly enough, open interest reached an all-time high on Monday evening before the crash. It crossed the previous week’s high to touch 317,734 BTC before the crash. Given that the same trend was recorded in the previous week, this indicates that investor sentiment remains unstable.
The largest drop in open interest denominated in bitcoin was recorded on the FTX cryptocurrency exchange. Most of the drop originated from here as the exchange saw open interest fall by 15.5% in just four hours. This is followed by other crypto exchanges, albeit to a lesser extent.
Binance, the leading cryptocurrency exchange in the space, has seen its open interest drop by 10.6% in the same time period. It was closely followed by the Bybit crypto exchange, which saw 9.1% of its open interest erased in a total of four hours.
BTC loses momentum ahead of US trading hours | Source: BTCUSD on TradingView.com
Interestingly, Bybit which recorded the lowest drop in open interest had seen the biggest impact on its funding rates. Although Binance and FTX are bigger, it was Bybit traders who witnessed a capitulation event to an even worse degree.
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Open interest is expected to recover over the next week given the ever-present interest in Bitcoin. However, the probability of holding a digital asset high is still low due to recent trends.
Featured image from SciTechDaily, charts from Arcane Research and TradingView.com
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