Unlike most of the other cryptocurrencies, Bitcoin remained inert for a while now. Consequently, despite nil volatility, the open interest has risen at higher levels. This could be a potential indication that a leverage flush may occur anytime soon.
The flagship asset has declined to as low as $46,332, losing more than $2000 since the start of the year. A move below the psychological mark of $50k support sparked heavy selling. This was succeeded by an additional price pullback well below the $48k support area.
Bitcoin Toppled By Open Interest!
Although the wider crypto space chugged up for relatively faster recovery, Bitcoin’s performance has been apathetic with nil volatility. The asset’s open interest has now extended to the value where a bulk of liquidations have been carried out in the past.
The open interest is a pointer that evaluates the total number of futures positions of BTC presently open on derivatives exchanges. When the indicator points to the bottom that means traders aren’t using much leverage and there will be very little volatility in the BTC price action.
As highlighted by Glassnode, the large amounts of leverage have been built upon BTC. Hence, swift volatility is expected anytime soon that could either go north or south. The metric from the chart reveals that in each case the open interest has reached its zenith, the asset has almost seen a price decline.
Will BTC Price Hit $38k or $52k First?
Whenever there is such a leverage flush event, the most powerful asset seems to have crashed alongside it. This would further indicate that the respective liquidations perhaps engaged in long positions. The recurrence in the alike trend would pull down the BTC price to bottom support of $38k.
Conversely, there are equal chances of an upward move. A crypto metric platform Santiment has confirmed that Bitcoin supply on exchanges is now 25% less compared to 2 years ago. Whilst the trader’s confidence is on the rise for the flagship asset, it would even show positive volatility rising up to $52k resistance in the next cycle.
Collectively, the flagship asset seems to be gaining strength between $45k to $48k over the past week. Yet the upcoming events are still foggy at the moment like when would Bitcoin price escape from the range-bound scale. As a whole, if open interest plays an assertive role, a liquidation event looks almost programmed.
Source: https://coinpedia.org/bitcoin/bitcoin-price-resilient-or-dwindling/