Bitcoin downtrend signals as futures’ total open interest hit $29 billion on August 16, despite Bitcoin’s price falling.
This suggests Bitcoin might still have “more room to fall,” according to crypto analysis platform CoinGlass, as open interest (OI) continues to rise despite recent price drops.
On August 16, CoinGlass tweeted that it’s “odd” open interest isn’t shifting with Bitcoin’s price.
Bitcoin Downtrend: Open interest hits $29 billion amid price drop
The platform revealed that Bitcoin futures’ total open interest (OI) surged to $29 billion on August 16 and has been on the rise all week, even as Bitcoin’s spot price fell by 5% over the past few days.
Open interest reflects the total number of active Bitcoin futures contracts that haven’t been settled or expired.
The firm explained that “a rise in open interest means both long and short positions are increasing.”
With growing OI, there’s more leverage in the market, which can intensify price swings in either direction.
This scenario played out on August 5, when a sudden flush of leverage caused Bitcoin to plunge by 20% in less than a day.
CoinGlass data reveals that funding rates have turned negative, meaning the price of Bitcoin derivatives has dipped below the spot price.
This could deter traders from holding long positions since they have to pay to maintain them, while short positions become more appealing.
At the end of the week, a crypto option expiry event is set to occur. On August 16, about 24,000 BTC contracts, valued at $1.4 billion, will expire, according to Deribit.
These expirations usually don’t significantly impact the spot markets. It’s the unwinding of large leverage positions that typically has a bigger effect.
In the last 12 hours, Bitcoin’s price has slipped by 3%, staying just above $58,000 in early trading on Friday, August 16.
