Bitcoin On-Chain Data Signals A Long Squeeze Brewing In Futures Market
30 Mai 2022 - 9:00PM
NEWSBTC
On-chain data shows the Bitcoin open interest is sharply rising, a
sign that a long squeeze may be brewing in the crypto futures
market. Bitcoin Open Interest Has Observed Rise Recently, While
Funding Rates Remain Positive As pointed out by an analyst in a
CryptoQuant post, the futures market may be heading towards a long
squeeze in the near future. The “open interest” is an indicator
that measures the total amount of Bitcoin futures positions
currently open on derivatives exchanges. It includes both long and
short positions. An increasing value of the metric suggests users
are opening more positions right now. Such a trend can lead to
higher volatility in the crypto’s price. On the other hand, a
lowing open interest can mean positions on exchanges are closing
down. A rapid swing in the price can cause a mass liquidation,
sharply taking the indicator’s value down. Related Reading
| Bitcoin Bearish Signal: Whale Ratio Continues To Stay At
High Value These liquidations cascade together, amplifying the
price move. Such an event is called a long or short liquidation
“squeeze” (depending on the direction of the price change). Now,
here is a chart that shows the trend in the Bitcoin funding rates
over the past couple of weeks: Looks like the value of the metric
has moved up recently | Source: CryptoQuant As you can see in the
above graph, the Bitcoin open interest has observed a significant
increase in the last few days. The chart also includes the data of
another indicator, the “funding rates.” This metric measures the
periodic fee that futures traders have to pay each other. A
positive value shows there are more long traders in the market at
the moment as they are paying a premium to keep their positions. On
the contrary, a negative value implies a short sentiment is
dominant right now. Looking at the graph, it seems like the Bitcoin
funding rate is positive currently. This means that most of the
recent increase in the open interest has to be because of new long
positions opening. Related Reading | Bitcoin Dominance Remains
High As Market Sell-Offs Settle Historically, a very high open
interest has usually resulted in a liquidation squeeze. Since longs
are dominant right now, a long squeeze is probable if the price
observes a steep decline. BTC Price At the time of writing,
Bitcoin’s price floats around $30.5k, up 1% in the last seven days.
Over the past month, the crypto has lost 21% in value. The below
chart shows the trend in the price of the coin over the last five
days. The value of Bitcoin seems to have surged past the $30k mark
| Source: BTCUSD on TradingView Featured image from Unsplash.com,
charts from TradingView.com, CryptoQuant.com
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