Coin Glass Predicts Bitcoin Retest of $55K as Open Interest Hits $29B

• Bitcoin tumbles to $56K, but open interest surge defies gravity.
• The total open interest for BTC is at $29B, a 2.14% increase in the last 24 hours.
• An order book heatmap data signals a potential plunge to $55,000.

A recent technical analysis of Bitcoin’s price by Coin Glass suggests Bitcoin is under intense bearish pressure, evidenced by its recent price decline and a rising surge in open interest. This counterintuitive market behavior, where the number of outstanding derivatives contracts increases despite a falling price, comes as a surprise to the cryptocurrency community.

Data from Coinglass records the total Open Interest at $29.73 billion, an increase of 0.62% as of the time of press and 1.79% and 2.14% in the four-hour and 24-hour timeframes, respectively. 

Additionally, Chicago Mercantile Exchange (CME), Binance, and Bybit lead the Open Interest by exchanges, with a value of $8.40 billion, $6.80 billion, and $4.17 billion, respectively.

This increase in OI has been observed despite Bitcoin’s value dropping to a low of $56,161 earlier today. Typically, a declining price would lead to a decrease in open interest as traders unwind their positions. 

However, the current market dynamic suggests a different narrative. Both bullish and bearish investors are increasing their positions, potentially setting the stage for a significant price movement. According to Coin Glass, the current trend suggests Bitcoin is more likely to drop than increase.

An order book heatmap analysis by Coin Glass further reinforces the bearish sentiment. The chart, which shows a clear downward trend in Bitcoin’s price alongside the rising open interest, suggests a potential price target of $55,000. As of the time of this press, BTC trades at $58,401.31, and a 5.82% drop will see it plummeting to $55,000.

Adding to the bearish outlook, the market is witnessing a lopsided liquidation, with long positions bearing the brunt of the downturn. In the past 24 hours, $61.8 million in liquidations has been recorded, with $42.3 million stemming from long positions and $19.5 million from short positions. This overwhelming liquidation of long positions exerts immense downward pressure on Bitcoin’s price.