Bitcoin futures open interest hits all-time high; Here’s what it means

With Bitcoin (BTC) hovering below $70,000,  the record-breaking futures open interest may offer clues about its next price movement.

As it stands, Bitcoin’s futures open interest hit an all-time high of almost $40.5 billion on October 21, according to data retrieved by Finbold from the crypto on-chain analysis platform CoinGlass.

Implication of Bitcoin’s futures open interest 

Open interest refers to the value or number of outstanding futures contracts that have yet to expire. Typically, this metric measures the amount of money invested in Bitcoin derivatives at any given time. 

A high level of open interest suggests more active engagement from traders, hinting at greater market liquidity and speculation.

This milestone coincides with Bitcoin’s current rally, as traders eye $70,000 as a key resistance level that could lead to new highs.

Therefore, the significant open interest could signal more trouble ahead, considering that prices tend to move sharply, leading to possible liquidations that can have far-reaching effects, such as dumping in the spot market.

Such a scenario was witnessed back in early August when Bitcoin plunged by about $12,000 to trade below $50,000 in a move that was considered a ‘flush-out.’ 

This might not be a welcomed outlook for most crypto enthusiasts anticipating the ‘Uptober’ momentum, where the asset typically rallies in October.

On the other hand, the sentiment of a possible drop in Bitcoin is highlighted by the overall mood in the crypto market, as exhibited by the Fear and Greed Index. As of press time, the Index had entered the ‘Greed’ zone, signaling that the market might be overvalued and a potential sell-off could be on the horizon.

In line with market sentiments, a previous Finbold report noted that search interest in ‘Bitcoin’ on Google had hit a yearly low.

What next for Bitcoin 

For optimistic investors, the possibility of a sustained rally can be deduced from the activity around stablecoins, where Tether (USDT) has hit a market cap of above $120 billion. 

The increased buying pressure in stablecoins is viewed as a bullish signal, indicating potential market interest since these coins act as a bridge to various assets.

Elsewhere, an analysis shared by Titan of Crypto in an X post on October 21 pointed out that Bitcoin has attained a major milestone. Since July, this marks the first time that the cryptocurrency has closed a weekly candle above the key $65,000 level, hinting at a possible price breakout.

The analysis indicated that Bitcoin has successfully surged past this level and is now on track toward the projected target zone of $100,000.

Bitcoin price analysis 

Bitcoin was trading at $68,2100 by press time, with modest daily losses of less than 0.2%. The maiden cryptocurrency remains in the green on the weekly timeframe, gaining over 5%.

Although the digital asset seems to be consolidating, a review of technicals, such as the 50-day and 200-day simple moving averages, hints at a possible rally in the near and long term. 

However, as the market anticipates a possible price breakout, caution is warranted. The asset’s 14-day relative strength index (RSI) is hovering near overbought territory at 69.58, suggesting the potential for a short-term correction.