3 things to watch in Bitcoin over the weekend

The price of Bitcoin has been on a rollercoaster for the past few days, but it seems that, at least for now, the bulls have the upper hand.

They succeeded in recovering the important technical and psychological level of $60,000 and are currently trying to push BTC above $61,000.

Source: TradingView

However, we are heading into the weekend, when price action tends to be quite different due to a number of factors, including a lack of volume.

With that in mind, let’s look at three things to watch out for over the weekend that could have an impact on Bitcoin’s price performance.

Trading volume and how it affects volatility

Typically, higher volatility is associated with higher trading volume. However, it is also worth noting that trading volume can be a reactionary metric, a function of volatility. In other words, traders react to market changes. If there is a sudden move in either direction, they open the respective lot of orders to protect or capitalize on the move, thus pumping more liquidity into the market.

Trading volume on weekends is traditionally lower than on weekdays. This plays into another metric called market depth. The lower the volume and thus the liquidity of the market, the easier it is to produce more significant price movements.

Just a few weeks ago, the price of BTC dropped from over $62,000 to under $57,000 over the weekend. At the time of writing, 24-hour volume is around $25 billion, which is more or less in line with the average, but any change in this metric in the coming days could be a sign for pay attention

Occult signs enchant promise

Another interesting metric to consider when gauging the possibility of future price movement is Bitcoin funding rates.

They are used to gauge whether buyers or sellers are executing their orders more aggressively. It is important to clarify here that funding rates are used in the derivatives market. However, the latter is known to affect spot prices as well, so it is an important consideration.

Just a few days ago, we reported that funding rates had dropped to near zero after Bitcoin’s price plunged below $60,000. This suggested that there might be an incoming bounce, and sure enough, just one day later, the cryptocurrency soared above $61,000.

At the time of writing, some exchange funding rates have even turned negative on some crypto exchanges, marking the potential for more volatile movement in the coming days, especially given the increase in trading volumes.

Source: Coinalyze Bitcoin price and how it is affected by open interest

Bitcoin open interest is another important metric that can play a role in forming bigger moves over the weekend.

It is another important metric used in the derivatives market. It is essentially the sum of all open positions, regardless of whether they are long or short. Large or rising open interest is usually a precursor to volatility.

Data shows that over the past 24 hours, there has been a 1.7% increase in OI perpetual contracts and a 0.2% increase in futures contracts.

Source: Coinalyze

Strong open interest heading into the weekend, along with lower trading volume and broader market liquidity, could mean it would be easier to move the market with less effort.

Here are three things worth watching in the coming days to avoid surprises and potentially take advantage of opportunities.

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