Bitcoin‘s open interest, a measure of the total number of outstanding derivative contracts not yet settled, has soared to a 19-month high of approximately $17.04 billion. This surge, which represents a 7.89% increase in the last 24 hours, is reminiscent of the situation prior to the Terra LUNA crash in March 2022.
The majority of the current open interest is concentrated on major exchanges such as CME, Binance and Bybit. This significant increase in open interest could be an indicator of where the price of bitcoin is headed next. Historical patterns suggest that an increase in open interest can lead to an increase in the price of bitcoin. For example, in March 2022, a similar increase in open interest was followed by a rise in Bitcoin’s price from $38,700 to over $47,000 within a month.
Today, bitcoin is trading at $37,500. If the current trend is in line with the historical precedent set in March 2022, market watchers are anticipating the possibility of Bitcoin’s price rising towards $45,000 by the end of the month.
However, there is also caution in the air due to past patterns where a spike in open interest led to a subsequent decline in bitcoin’s value. In April 2022, after a peak in open interest, the market experienced a downturn, with the price of bitcoin falling to $27,000.
Investors and analysts alike are keeping a close eye on these developments, as they could signal the next significant move for bitcoin’s price in either direction. With memories of past volatility still fresh, market participants are weighing the potential for growth against the risk of another downturn.
