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Data shows the Bitcoin Open Interest on the cryptocurrency exchange Binance has recently shot up. What could this mean for the asset’s price?
Bitcoin Binance Open Interest Has Seen A Sharp Increase
As explained by an analyst in a CryptoQuant Quicktake post, the Bitcoin Open Interest on Binance has spiked. The “Open Interest” refers to an indicator that measures the total amount of BTC positions that are currently open on a given derivatives platform.
When the value of the metric goes up, it means the investors are opening up fresh positions on the market. As the total amount of leverage present in the sector rises when new positions appear, this kind of trend can lead to the asset’s price becoming more volatile.
On the other hand, the indicator observing a decline suggests the holders are either closing up positions of their own volition or getting liquidated by their platform. Since leverage goes down with such a trend, the cryptocurrency can become more stable following it.
Now, here is a chart that shows the trend in the 24-hour percentage change of the Bitcoin Open Interest for the Binance exchange over the past month:
As displayed in the above graph, the 24-hour change in the Binance Bitcoin Open Interest recently shot up to a notably positive value, implying the number of positions on the platform saw a significant jump.
At the peak of this spike, the indicator hit a value of more than 6%. From the chart, it’s visible that there have been a couple of other occasions that the metric has breached this mark during the past month.
Interestingly, each of these spikes coincided with points that preceded a period of consolidation/decline for Bitcoin. As the quant notes,
This recurring pattern suggests that large inflows into leveraged positions often precede periods where short-term gains are realized, leading to potential price pullbacks or sideways movement as market participants de-risk.
The analyst has also shared another chart, this one tracking the 7-day change in the Realized Cap of the short-term holders and long-term holders. The “Realized Cap” refers to an indicator that keeps track of the capital that the holders have invested into Bitcoin.
Below is a chart that shows the change in this metric for two investor cohorts, short-term holders (holding time of 155 days or lesser) and long-term holders (holding time greater than 155 days).
As is apparent from the graph, the 7-day change in the Realized Cap has recently been positive for long-term holders, which suggests capital has been maturing from the short-term holders into this cohort.
That said, earlier in the month, the indicator hit a peak of $57 billion, but today it has come down to just $3.5 billion. So, while capital is still aging into long-term holders, it’s now happening at a much slower rate.
BTC Price
Bitcoin has been attempting to break past the $108,000 mark, but so far, it hasn’t found success as its price is still trading around $107,200.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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