Continuous downward price movement of Bitcoin It is starting to impact the trend of several key metrics on the chain as the decline continues. With the strong downtrend in Bitcoin price, open interest (OI) has now turned towards negative territory, reflecting the intensity of the current volatile phase.
Cool Bitcoin Relax as Open Interest Drops Sharply
After a long period of negative performance of Bitcoin prices,… Open interest It has officially followed suit, seeing a significant decline not seen in years. Darkvost, a market expert and author of Cryptoquant, reported the notable decline, meaning Bitcoin derivatives traders are facing a crucial moment.
In this quick post, market expert Highlight The drop in BTC open interest represents the largest 30-day drop in the entire cycle. With successive liquidations and a decline in speculative bets changing the short-term outlook for Bitcoin, the sudden unwinding of leveraged positions suggests that traders are quickly de-risking.
The data shared by Darkfost shows this Binancethe largest centralized exchange, is responsible for most of the traffic, recording a decline of approximately 1.3 million BTC. According to the expert, a decline of this size on the Binance platform is normal as the platform oversees the largest trading volumes in the market.
Darkvost noted that the last time the market saw such a massive decline in open interest was during 2022. Bear markethighlighting the dramatic nature of the current correction. While the decline is likely to continue the price decline, it could also represent the fresh start needed for Bitcoin’s next major decision.
The Bitcoin price correction has been going on for several weeks and continues to trigger many liquidations. During the correction, many investors were observed taking positions against the trend, which mechanically fueled the decline in open interest. It is worth noting that part of the contraction was also due to… Investors who prefer to give up They either close their investments or reduce their risk exposure.
Is there a bottom in sight?
This sharp decline in open interest is not all bad for the market. Historically, Darkfeast stated that these stages of purification often played a crucial role in creation Strong bottom Laying the foundation for a new uptrend. A steady decline in speculative exposure, forced closing of overly optimistic positions, and curtailment all aid in rebalancing the market.
The interesting part of this cycle is that it was strongly driven by leverage and record futures activity. As a result, Bitcoin’s open interest rose to a new all-time high of $47.5 billion, indicating how strong traders were positioned before the decline.
Darkfost claims that such high levels of speculative intensity are rarely a sign of existence Healthy market environment. This is because when liquidity changes, it promotes an environment conducive to excesses, instability and sharp corrections, which are in line with the current market trend.
Featured image of Pngtree, chart from Tradingview.com
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