Bitcoin open interest passes $15B as analyst warns of 20% BTC price dip

The highest Bitcoin open interest levels in over six months come as analysis predicts that BTC price action will fail to flip $36,000 this week.

Bitcoin (BTC) fell toward $34,500 on Nov. 7 as analysts’ attention turned to mushrooming open interest.

Open interest “surge” spooks Bitcoin pundits

Data from Cointelegraph Markets Pro and TradingView showed BTC price trajectory struggling to reclaim $35,000 as support.

The largest cryptocurrency lacked clear direction into the Wall Street open, but market participants predicted that volatility would soon return.

The reason, they said, was a sharp increase in open interest (OI) on derivatives markets.

“Almost 10k BTC (~$350MM USD) in open interest added today. Fireworks soon,” financial commentator Tedtalksmacro predicted on the day.

As Cointelegraph reported, open interest reaching elevated levels has coincided with bouts of volatility in recent months.

Commenting on current levels, which totaled nearly $15.5 billion at the time of writing per data from CoinGlass, James Van Straten, research and data analyst at crypto insights firm CryptoSlate, described the fluctuations as “noticeable.”

“The CME exchange, preferred by institutional investors, has achieved a new record in open interest, with 105,380 BTC contracts open, valued at $3.68 billion. Binance has edged past this figure with open interest of approximately 113,500 BTC,” he noted.

“This trend points to increasing involvement in Bitcoin futures, hinting at either a positive shift in market mood or a move towards protective strategies by investors.”

The sense of uncertainty over how the OI phenomenon would polay out was shared by J. A. Maartunn, a contributor to on-chain analytics platform CryptoQuant.

Bitcoin – Low Timeframe

The Open Interest on #Bitcoin futures is ramping up. Certain apes are taking significant positions, but it’s unclear to me whether they are going short or long. pic.twitter.com/47anTWRAaA

— Maartunn (@JA_Maartun) November 7, 2023

In analysis the day prior, he suggested that OI was now in territory which had previously seen 20% BTC price drawdowns.

“Historically, whenever this metric surpassed $12.2 billion, it resulted in a minimum 20% decline in bitcoin price,” he wrote on X, saying that OI deserved “significant attention.”

Analysis: $36,000 BTC price “off the table” this week

Continuing the coverage, popular trader Skew referenced the significance of current price levels on low timeframes.

Related: Inordinately high — Bitcoin Ordinals send BTC transaction fees to new 5-month peak

Whoever is “wrong” on direction, he told X subscribers, would face difficulties, fuelling a potential volatile price reaction.

$BTC
Looking like a short covering bounce here

Some OI coming off the lows too here https://t.co/R7fglUGthX pic.twitter.com/S6d0QuhCTi

— Skew Δ (@52kskew) November 7, 2023

Looking ahead, monitoring resource Material Indicators concluded that $36,000 would remain the ceiling for the time being.

“Calling a local top at $36k doesn’t mean >$36k is off the table this year, but the metrics I’m looking at indicate that at the very least, it’s off the table for this week,” part of X analysis on Nov. 6 read.

“That call also doesn’t mean price will free fall back to the prior $25k-$28.5k range, but if a bull breakout isn’t validated this month, that range low is critical.”

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.