Data shows that bitcoin open interest has plummeted as btc has crossed the $60,000 level, suggesting that large liquidations have occurred.
bitcoin open interest has plummeted as shorts have been hit
In a new x.com/jjcmoreno/status/1821743668752941522″ target=”_blank” rel=”noopener nofollow”>mail On x, CryptoQuant’s head of research Julio Moreno has discussed the latest trend that has developed in bitcoin’s open interest. “Open interest” here refers to an indicator that tracks the total number of btc-related derivatives positions currently open across all exchanges.
When the value of this metric increases, it means that investors are opening new positions in the market at this time. As the total leverage in the sector usually increases when new positions appear, this trend can lead to more volatility in the asset price.
On the other hand, the indicator that registers a fall implies that holders are closing positions of their own free will or that their platform is liquidating them. Generally, the price becomes more stable following this trend due to the decrease in leverage.
Now, here's a chart showing the trend in bitcoin open interest over the past week or so:
<img decoding="async" class="aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/08/Bitcoin-Open-Interest-Grows-as-BTC-Crosses-61000.jpeg" alt="bitcoin Open Interest” width=”1600″ height=”900″/>
The value of the metric appears to have gone through a steep drawdown in recent days | Source: x.com/jjcmoreno/status/1821743668752941522/photo/1" target="_blank" rel="noopener nofollow">@jjcmoreno on x
In the chart, bitcoin's open interest is denominated in btc, rather than USD as is usually the case. The advantage of it being denominated in btc is that its value is not altered by changes in the price of the currency.
The chart shows that the indicator had experienced a sharp drop a few days ago as the asset had suffered a fall. This drop caused a large amount of long-term liquidation, resulting in the metric falling.
Over the past 24 hours, it seems that the opposite has happened, as a strong rally has triggered a large amount of short position liquidations in the market. Naturally, open interest has plummeted again thanks to this.
Data from CoinGlass provides the exact numbers involved in the latest bitcoin short squeeze.
<img loading="lazy" decoding="async" class="alignnone size-medium wp-image-314437 aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/08/Bitcoin-Open-Interest-Grows-as-BTC-Crosses-61000.png" alt="bitcoin Liquidations” width=”640″ height=”298″ srcset=”https://bitcoinist.com/wp-content/uploads/2024/08/details.png?w=784 784w, https://technicalterrence.com/wp-content/uploads/2024/08/Bitcoin-Open-Interest-Grows-as-BTC-Crosses-61000.png 640w, https://bitcoinist.com/wp-content/uploads/2024/08/details.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2024/08/details.png?w=750 750w” sizes=”(max-width: 640px) 100vw, 640px” data-recalc-dims=”1″/>
The liquidations that have occurred during the last 24 hours for each symbol | Source: CoinGlass
As seen above, bitcoin-related contracts have seen liquidations worth over $94 million over the past day, almost double what second-placed ethereum (eth) has seen (just under $53 million).
The entire cryptocurrency derivatives sector has seen liquidations worth $212 million over this period. Shorts have offset the majority of this surge with liquidations of $137 million.
<img loading="lazy" decoding="async" class="alignnone size-medium wp-image-314439 aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/08/1723313551_772_Bitcoin-Open-Interest-Grows-as-BTC-Crosses-61000.png" alt="bitcoin and others” width=”552″ height=”298″ data-recalc-dims=”1″/>
The data for the total market liquidations | Source: CoinGlass
Given the massive scale of the short squeeze, it is likely that bitcoin's sharp price surge was fueled in part by this cascade of liquidations.
btc Price
At the time of writing, bitcoin is hovering around $60,300, down around 8% over the past seven days.
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Looks like the price of the asset has gone through recovery recently | Source: BTCUSD on TradingView
Featured image by Dall-E, CoinGlass.com, chart by TradingView.com
