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Bitcoin, the first and largest cryptocurrency by market value, extended its recovery from lows of $83,804 on Sunday into Monday, reaching intraday highs of $88,804. Bitcoin generally stayed around $85,000 during the weekend, constrained by concerns about inflation and the larger U.S. economy.
At press time, Bitcoin has increased by 4.24% in the previous 24 hours to $88,599, with most other cryptocurrencies trading in the green.
Bitcoin's recent price surge has coincided with an increase in open interest. This has triggered the issuance of a Bitcoin market alert as leverage increases on the market.
According to CryptoQuant, as Bitcoin approached $88,000, open interest (OI) hit record levels above $32 billion. While this may seem positive, there is a catch: high open interest and rapid price increases raise the risk of liquidation cascades.
Tomiwabold OlajideIf the rally continues, the FOMO could fuel a parabolic move. But if bulls lose control, this might result in a sharp correction as over-leveraged positions get wiped out.
In this light, CryptoQuant urges the crypto community to keep a lookout for sudden open interest (OI) shifts and Bitcoin's price action.
Further volatility imminent?
An increase in futures open interest on Binance has contributed to the Bitcoin OI surge, reinforcing the market's upbeat sentiment and signaling long-term gains.
Denys SerhiichukAccording to CoinGlass data, open interest on the Binance exchange's BTC-USDT futures surged by nearly 7,000 BTC ($614.6 million) in the early Monday trading session. In a tweet, CoinGlass noted that "about 7,000 BTC open interest was added on Binance futures." Open interest is the number of active (or open) contracts at any given time.
"This is a good sign, volatility is coming," CoinGlass said, referring to the significant spike in open interest.
Furthermore, Binance funding rates have remained positive, indicating a propensity for leveraged bullish (long) bets.
Vladislav Sopov
Dan Burgin