Bitcoin On-Chain Data Signals A Long Squeeze Brewing In Futures Market

    On-chain knowledge reveals the Bitcoin open curiosity is sharply rising, an indication {that a} lengthy squeeze could also be brewing within the crypto futures market.

    Bitcoin Open Interest Has Observed Rise Recently, While Funding Rates Remain Positive

    As identified by an analyst in a CryptoQuant post, the futures market could also be heading in the direction of an extended squeeze within the close to future.

    The “open interest” is an indicator that measures the full quantity of Bitcoin futures positions presently open on derivatives exchanges. It contains each lengthy and quick positions.

    An rising worth of the metric suggests customers are opening extra positions proper now. Such a development can result in increased volatility within the crypto’s value.

    On the opposite hand, a lowing open curiosity can imply positions on exchanges are closing down. A fast swing within the value may cause a mass liquidation, sharply taking the indicator’s worth down.

    Related Reading | Bitcoin Bearish Signal: Whale Ratio Continues To Stay At High Value

    These liquidations cascade collectively, amplifying the value transfer. Such an occasion is known as an extended or quick liquidation “squeeze” (relying on the route of the value change).

    Now, here’s a chart that reveals the development within the Bitcoin funding charges over the previous couple of weeks:

    Bitcoin Open Interest And Funding Rates

    Looks like the worth of the metric has moved up not too long ago | Source: CryptoQuant

    As you’ll be able to see within the above graph, the Bitcoin open curiosity has noticed a major enhance in the previous few days.

    The chart additionally contains the info of one other indicator, the “funding rates.” This metric measures the periodic price that futures merchants should pay one another.

    A optimistic worth reveals there are extra lengthy merchants out there in the meanwhile as they’re paying a premium to maintain their positions.

    On the opposite, a damaging worth implies a brief sentiment is dominant proper now. Looking on the graph, it looks like the Bitcoin funding charge is optimistic presently.

    This implies that a lot of the current enhance within the open curiosity needs to be due to new lengthy positions opening.

    Related Reading | Bitcoin Dominance Remains High As Market Sell-Offs Settle

    Historically, a really excessive open curiosity has often resulted in a liquidation squeeze. Since longs are dominant proper now, an extended squeeze is possible if the value observes a steep decline.

    BTC Price

    At the time of writing, Bitcoin’s price floats round $30.5k, up 1% within the final seven days. Over the previous month, the crypto has misplaced 21% in worth.

    The under chart reveals the development within the value of the coin during the last 5 days.

    Bitcoin Price Chart

    The worth of Bitcoin appears to have surged previous the $30k mark | Source: BTCUSD on TradingView
    Featured picture from, charts from,

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