Data shows that bitcoin open interest has seen a rise to a new all-time high (ATH) recently, a sign that volatility could be brewing for btc.
bitcoin Open Interest Has Increased Recently
As noted by CryptoQuant founder and CEO Ki Young Ju in a new x.com/ki_young_ju/status/1846811567079489686″ target=”_blank” rel=”noopener nofollow”>mail At x, bitcoin open interest just set a new record. “Open interest” here refers to an indicator that tracks the total number of btc-related derivatives positions that are open across all centralized exchanges.
Below is the graph shared by Young Ju showing the trend of this metric over the past few years:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/10/Bitcoin-Open-Interest-Sets-New-Record-of-20-Billion-Details.jpeg" alt="bitcoin Open Interest” width=”4000″ height=”2250″/>
The value of the metric appears to have been heading up in recent days | Source: x.com/ki_young_ju/status/1846811567079489686/photo/1" target="_blank" rel="noopener nofollow">@ki_young_ju on x
As can be seen from the chart, bitcoin open interest has increased recently, suggesting that investors have been opening new positions in the market. After the latest continuation of the increase, the indicator reached a value of 20 billion dollars, which is a new record. As for what this high could mean for the cryptocurrency price, a high open interest is usually followed by strong volatility in the asset.
On paper, this volatility can take the coin in either direction, but on the chart, it is evident that spikes in the indicator have, in fact, generally led to highs for the cryptocurrency.
The source of volatility is usually mass liquidation events, which are likely to take place when the market has a large number of positions with high leverage involved.
in another x x.com/ki_young_ju/status/1846856663435039067″ target=”_blank” rel=”noopener nofollow”>mailCryptoQuant CEO shared bitcoin's estimated leverage ratio data, which basically tells us about the average amount of leverage that users are currently opting for.
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/10/1729275196_818_Bitcoin-Open-Interest-Sets-New-Record-of-20-Billion-Details.jpeg" alt="bitcoin ELR” width=”4000″ height=”2250″/>
Looks like the value of this metric has also been rising recently | Source: x.com/ki_young_ju/status/1846856663435039067/photo/1" target="_blank" rel="noopener nofollow">@ki_young_ju on x
The estimated leverage ratio is calculated as the ratio of the open interest to the total exchange reserve of the underlying asset. In the current case, Young Ju has published the version of the indicator that tracks positions that have the Tether stablecoin, USDT, as collateral.
While this certainly doesn't cover the entire market, this version of the metric can still give us an idea of the general trend followed by traders as a whole.
As shown in the chart above, bitcoin's estimated leverage ratio for the USDT pair has recently spiked, implying that investors have increased their risk appetite.
Therefore, with all this leverage involved, btc could really be at risk of seeing a volatile explosion. Considering that these new positions that have been emerging could be long positions, traders who are betting on a bullish outcome may once again be the ones trapped in volatility.
btc Price
bitcoin had broken through the $68,000 level yesterday, but the asset appears to have seen a pullback since then as it is now down to $67,200.
x/shiDM3Pm/” alt=”bitcoin price chart” width=”1486″ height=”852″/>
The price of the coin appears to have been riding an uptrend over the last few days | Source: BTCUSDT on TradingView
Dall-E Featured Image, CryptoQuant.com, TradingView.com Chart
