FundingVest
Bitcoin’s Open Interest Is Rising Again: Volatility Ahead
As Bitcoin declined toward the $60,000 level, the 30-day Open Interest change dropped to around -30%. During this period, a large number of positions were forced to close, and significant liquidations took place. This structure showed that the excessive leveraged positioning built up in the futures market had been largely flushed out. Looking at the most recent days, the 30-day Open Interest change has entered a strong recovery phase. This suggests that new positions are being added back into the market and that volatility is likely to increase over the next few weeks. In the coming weeks, Bitcoin may face a highly volatile environment. As Open Interest continues to rise, leverage in the market also builds up. This can open the door to stronger price swings, sudden directional moves, and another round of forced liquidations. The current compression phase may leave its place to a much clearer expansion and volatility phase within the next few weeks.