• While the nominal open interest (OI) has decreased, OI expressed in BTC has remained constant alongside positive funding rates.
  • According to observers, this is a sign that longs are in high demand despite the recent price drop.

BTC Price Index and Live Chart – CoinDesk”>(BTC) futures and perpetual futures, a crucial market sentiment gauge, has declined roughly 18% from $37 billion to $30.2 billion in one month, alongside a 14% slide decline in the cryptocurrency’s spot market price, according to data source Coinglass.

The data suggests that bullish leveraged wagers, anticipating a rise in price, have been settled over the last four weeks. BTC’s recent price decline is due to the unwinding bullish bets.

This interpretation is only partially correct and may mask the bullish undercurrents of the market.

Open interest is the number or active contracts that are open at any given time. Notional open interest can be calculated by multiplying number of units per contract by the current spot price. The notional open interests can be affected by changes in asset prices even if the total number contracts is constant.

This is the case on the BTC markets.

According to Coinglass, the open interest rate has been stable above 500,000 BTC for four weeks. The perpetual funding rates that are charged by the exchanges every 8 hours have remained positive for four weeks, showing a bias towards bullish bets.

BTC futures are open for interest in BTC. (Coinglass) (Coinglass)

The combination of positive funding rates and steady open interest expressed in BTC, along with a decline in the notional open interests, suggest that traders are setting new long positions to offset other market participants’ supposed unwinding bullish bets.

Laurent Kssis is a crypto ETF expert at CEC Capital. He says that this could be a sign that traders aren’t yet afraid to go long.

“This assumption is correct.” As the market is still very unreliable, there are also more protection strategies being implemented. Remember that the last liquidity washouts were enough to drive the market below $60K. The hesitation to place long orders still isn’t dominating the market, but hedging plays a large role in trading.”

Some traders may be hopeful that bitcoin will resume its upward trend once the pressure of Mt. Once the Mt.


BTC OI-weighted financing rate (Coinglass) (Coinglass)

The positive spread that is consistently present between spot and futures prices, commonly referred to by the term basis, can also be used to draw a similar conclusion.

The basis is down slightly, but still attractive. There is still demand for positions in the basis trading. Expectations of a breakout will increase as macro tailwinds build and the selling pressure is expected to subside soon. Investors could accumulate strategic longs at low funding rates, according to Noelle Acheson of the Crypto Is Macro Now Newsletter.

The spot and option markets also suggest a positive bias.

Griffin Ardern is the head of options trading at BloFin and is responsible for research. He says that Bitfinex, a crypto exchange, has exerted bullish pressure on the market during the recent price drop.

Ardern, speaking to CoinDesk, said that Bitfinex whales had been buying dips in the spot since late June. However, she has not seen similar signals on the other derivatives markets.

Since June, the margin longs, or borrowing funds to purchase an asset on Bitfinex’s spot market, are steadily increasing.


BTC’s long margin positions. (Coinglass) (Coinglass)

According to QCP Capital traders are buying options topside in the market.

“Despite the selling-off, the option market is heavily skewed to the upside, suggesting that market participants are still expecting a rally at the end of the year. The desk has observed a significant amount of buying interest for the longer-term calls at the strike price of $100K/$120,” QCP stated in a Wednesday market update.

Parikshit Miishra is the editor.