Bitcoin’s price has seen a slight uptick after a period of wild swings, but some key indicators suggest trouble might be brewing.
Open Interest: A Major Drop
Several important metrics are flashing red, raising concerns about Bitcoin’s future price. One key indicator, open interest (OI), has plummeted. Alphractal, a crypto data platform, reported a massive $7.4 billion drop in OI over the past week across most exchanges (except Bitfinex, which saw a small increase). This sharp decline suggests investors are pulling back, reducing their bets on Bitcoin’s continued rise. This decrease in speculative activity is likely to cause more price volatility in the short term.
The drop in OI was accompanied by significant liquidations of leveraged positions, adding to Monday’s price volatility. If this trend continues, it could seriously dent confidence among traders who use derivatives, negatively impacting Bitcoin’s price.
Interestingly, despite the sell-offs, the overall funding rate remains positive, suggesting that long positions (bets on price increases) still dominate.
Long-Term Holders Remain Confident (For Now)
While short-term traders might be worried, long-term investors seem unfazed. On-chain analyst Darkfost reports that long-term holders have accumulated over 159,000 BTC in the last 30 days. This accumulation, despite recent volatility, is generally seen as a positive sign. However, Darkfost cautions that these accumulation periods can last for months, even during bear markets, so it’s not necessarily a guarantee that the price has bottomed out.
Uncertainty Remains
The overall market outlook remains uncertain due to a combination of factors, including a shaky global economy and ongoing political issues.
At the time of writing, Bitcoin was trading around $85,107, up over 3% in the last 24 hours, but trading volume is down, hinting at a possible return to bearish sentiment. The situation is complex, and whether Bitcoin will continue its upward trajectory or experience a significant pullback remains to be seen.
