• Bitcoin open interest has dropped by 15% in the past two weeks, with roughly 300,000 BTC worth of contracts unwound since October 2022.
• The current OI level is similar to that seen in early 2022.
• This trend will continue if OI continues to decline while spot Bitcoin accumulates.
Bitcoin Open Interest Drops Almost 15% In Past Two Weeks
The total amount of funds allocated in open futures contracts, known as Open Interest (OI), peaked in October 2022 at 667,000 BTC. Now, only 368,000 BTC are allocated in OI contracts – a decrease of 300,000 Bitcoin and a drop of almost 15% in the past two weeks.
Price Increase Of Bitcoin Alongside Leverage Unwinding
Bolstered by this significant decrease in OI, Bitcoin’s price has jumped from $19,000 to $26,000 during this period. This increase is indicative of an extremely healthy market structure due to the unwinding of leverage alongside an increased price for the cryptocurrency.
Continuing The Trend
For this trend to continue and sustain itself over time–OI must continue to decline while spot Bitcoin accumulates. With more investors entering into the market and taking up long positions without having to borrow money or use leverage–the trend should persist over time if buyers keep their positions open and do not close them out quickly.
James Van Straten’s Take On The Situation
James Van Straten–Research Analyst at CryptoSlate–describes his take on this situation as “extremely healthy” as it allows for “freedom and technology maximalism” with Bitcoin being labeled as “the greatest invention of the 21st century”.
CryptoSlate reminds its readers that no content within this article should be considered investment advice nor does CryptoSlate endorse any project mentioned or linked to within this article. Investing and trading cryptocurrencies should always be done with caution due to their volatile nature; CryptoSlate takes no responsibility should you lose money trading cryptocurrencies