Key points:
The increase in spot and futures trading volumes shows that traders are returning to the cryptocurrency market.
Traders have upside, but the charts suggest swing traders will sell at the highs of the intraday rally.
Cryptocurrency market price movements were volatile on Tuesday, with Bitcoin (BTC) hitting a daily high of $114,000 and Ethereum (ETH) briefly rising to $4,110. Solana’s SOL (SOL) also attempted a move above the $200 level with a quick rally to $198. At least for Bitcoin, the breakout rally coincides with an increase in BTC’s open interest and suggests traders are returning to the market following the devastating selloff on October 10 that saw $20 billion in futures liquidated.
Evidence that traders have rejoined the market can be seen in data from CoinGlass that shows Bitcoin futures open interest has risen to more than $32 billion from an October 11 low of $28 billion.
Hyblock analysts provided a chart showing Bitcoin’s 4-hour fixed open interest and cumulative volume delta turning positive, rising from $107,453 to $114,000. This breakout rally was also accompanied by a rise in BTC’s funding ratio, suggesting that the move was driven by the futures market.
Analysts said that as the price of Bitcoin re-establishes itself in the range after the sell-off, traders will begin targeting the areas of greatest liquidity. This is the dynamic that played out today, with the BTC price absorbing upper liquidity in the $114,000 to $115,000 range.
relevant: 10/20 Price Prediction: SPX, DXY, BTC, ETH, BNB, XRP, SOL, DOGE, ADA, HYPE
Data shows traders are starting to become more comfortable adding risk, but “sellers are expected to continue to close profitable positions at intraday highs,” said Rakesh Upadhyay, technical analyst at Cointelegraph. On the other hand, bulls are expected to defend the $107,000 support level.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.