Bitcoin On-Chain Data Signals A Long Squeeze Brewing In Futures Market

On-chain information reveals the Bitcoin open curiosity is sharply rising, an indication {that a} lengthy squeeze could also be brewing within the crypto futures market.

Bitcoin Open Curiosity Has Noticed Rise Not too long ago, Whereas Funding Charges Stay Constructive

As identified by an analyst in a CryptoQuant post, the futures market could also be heading in the direction of an extended squeeze within the close to future.

The “open interest” is an indicator that measures the entire quantity of Bitcoin futures positions at present open on derivatives exchanges. It consists of each lengthy and brief positions.

An rising worth of the metric suggests customers are opening extra positions proper now. Such a pattern can result in greater volatility within the crypto’s value.

Alternatively, a lowing open curiosity can imply positions on exchanges are closing down. A speedy swing within the value may cause a mass liquidation, sharply taking the indicator’s worth down.

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These liquidations cascade collectively, amplifying the value transfer. Such an occasion is named an extended or brief liquidation “squeeze” (relying on the route of the value change).

Now, here’s a chart that reveals the pattern within the Bitcoin funding charges over the previous couple of weeks:

Seems like the worth of the metric has moved up just lately | Supply: CryptoQuant

As you possibly can see within the above graph, the Bitcoin open curiosity has noticed a big enhance in the previous couple of days.

The chart additionally consists of the info of one other indicator, the “funding rates.” This metric measures the periodic payment that futures merchants must pay one another.

A optimistic worth reveals there are extra lengthy merchants out there in the meanwhile as they’re paying a premium to maintain their positions.

Quite the opposite, a adverse worth implies a brief sentiment is dominant proper now. Wanting on the graph, it looks as if the Bitcoin funding price is optimistic at present.

Because of this a lot of the latest enhance within the open curiosity must be due to new lengthy positions opening.

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Traditionally, a really excessive open curiosity has often resulted in a liquidation squeeze. Since longs are dominant proper now, an extended squeeze is possible if the value observes a steep decline.

BTC Value

On the time of writing, Bitcoin’s price floats round $30.5k, up 1% within the final seven days. Over the previous month, the crypto has misplaced 21% in worth.

The under chart reveals the pattern within the value of the coin over the past 5 days.

Bitcoin Price Chart

The worth of Bitcoin appears to have surged previous the $30k mark | Supply: BTCUSD on TradingView
Featured picture from Unsplash.com, charts from TradingView.com, CryptoQuant.com

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