According to analysts, the Bitcoin (BTC) market has reached an “inflection point” following the historic Bitcoin 2024 conference, where BTC futures open interest went out of range.
“We have finally broken out of this range,” independent analyst Hoss declared, referring to Bitcoin futures open interest.
Open Interest (OI) refers to the total number of BTC-related derivatives contracts currently open across all exchanges.
A rise in this indicator suggests that investors are opening new positions in the derivatives market. Typically, the total leverage of the market increases as new contracts are created, so an increase in OI can lead to higher volatility in the asset.
Independent market analyst Horse shared the following chart on Coinbase Pro, showing that Bitcoin’s OI has broken through levels it has maintained since BTC prices hit new highs in March.
Bitcoin OI rose along with the price as US politics shifted towards a pro-cryptocurrency stance.
Hoss cited former US President Donald Trump’s speech at the Bitcoin 2024 conference in Nashville on July 27, saying the sector had all the bullish factors handed to it on a silver platter.
“Whether this will actually come to fruition is debatable, but either way, the imperative to be bullish on this asset class over the long term is a little more pronounced.”
Hose explained that Bitcoin prices have been rising since Trump’s speech, as long bets have closed in the perpetual and options markets. “It’s very bullish,” he said.
“A fresh long here is abysmal on an r:r basis. If you go with that alone, you’ll be better off with a short or at least a hedge. It’s really stupid, but it’s worth noting, because the invalidation is so close. That is, a hedge 69+ will close on a breakout.”
Fellow analyst Skew shared a similar sentiment, saying the entire Bitcoin perpetual futures market is “net long.”
Related: Bitcoin Rise to $70K – Just 6% Needed for New Highs
Skew added that a drop to $72,000 would require “sustained spot buying,” which he said would cover the risk currently posed by long positions.
“But it’s pretty clear that if spot buying is halted for a while, the immediate risk of forced long leverage unwinding will become very apparent (often ending in a quick spurt in market buying liquidity). The market is at an inflection point.”
As Skew predicted, the Bitcoin price fell from $70,000 to $67,271, according to data from Cointelegraph Markets Pro and TradingView. This led to the liquidation of over $55.66 million worth of long BTC leveraged positions in the last 24 hours, with $46.74 million liquidated in the last 4 hours alone.
However, the ongoing correction may be short-lived as the BTC price is likely to soon hit a new all-time high, with Bitcoin futures OI hitting an all-time high of $39.4 billion.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.