Bitcoin and Ethereum have been super volatile lately, leading to a lot of trading activity. This has caused open interest (the total number of outstanding derivative contracts) for both to skyrocket. Let’s look at what this means.
Open Interest at Near Record Highs
In late August, Ethereum’s price surged, hitting a new all-time high above $4,950 thanks to big buys from companies like Bitmine and SharpLink. This price jump was accompanied by a massive increase in open interest, exceeding $70 billion for the first time ever. While it’s since dropped a bit, it’s still above $55 billion – showing significant market interest.
Bitcoin’s open interest didn’t quite hit a new peak in August, but it remained incredibly high, averaging around $80 billion, close to the July record of $86 billion.
What Does This All Mean?
Historically, when Bitcoin and Ethereum open interest hits all-time highs, we usually see a period of consolidation (the price stays relatively flat) followed by a retracement (a price drop). This happened earlier this year in February and June. After short consolidation periods, open interest rebounded, and prices rose again.
If open interest for Bitcoin and Ethereum hits new highs, it could signal that their prices are about to surge again. Following recent trends, we might see another open interest increase towards the end of September, potentially leading to higher prices.
