Changes in open interest suggest capital turnover in Altcoins: Santiment

On August 27, on-chain analytics provider Santiment reported that Bitcoin’s recent “slight” price drop was enough to cause a larger decline in total open interest on exchanges.

However, the OI for Ethereum and Solana has barely decreased, he added.

Open interest is a measure of the number or value of crypto derivative contracts that have yet to be settled and remain open. It can also be used to gauge market sentiment for spot markets.

Capital rotation?

Santiment made some observations based on the OI changes. He stated that there is a “shifting focus towards altcoins” as traders see growing potential in ETH, SOL and other recoveries from the market crash earlier this month.

Since the August 5 dump, Ethereum has recovered about 23% in value, while Solana has recovered 45%. Other altcoins, especially those based on artificial intelligence, have risen further, with many jumping to pre-elimination levels.

He also noted that the minor drop in BTC:

“Perhaps a sign that capital rotation is taking place from Bitcoin to altcoins by large traders, who are diversifying risk and seeking higher returns.”

However, most altcoins fell by similar amounts today.

📉 While Bitcoin has seen a slight price drop of -2.2% in the last 24 hours, it was enough to cause a much larger drop of -7.5% in total open interest on exchanges. By comparison, the total open interest in Ethereum and Solana has barely decreased. Some takeaways:

🎯 Shifting focus to… pic.twitter.com/vBltUQxcnX

— Santiment (@santimentfeed) August 27, 2024

Santiment added that traders “may have been reducing exposure” due to the uncertainty, concluding that the larger drop in BTC’s open interest, compared to smaller assets, “indicates that traders may seeing the August rally come to an end and trying to sell as much as possible.”

Several analysts have suggested that another season could be around the corner, as CryptoPotato reported on August 26.

Trader and analyst ‘Stockmoney Lizards’ said that altcoins still have a bit more to suffer in a post on X on August 26.

They added that Bitcoin’s dominance may increase to 60-70% after the halving before altcoins start to overtake BTC. It is currently 57.53%, according to Tradingview.

#Altcoins you still have to suffer a little more. BTC.Dominance May Rise Upto 60-70% After Halving Before Alts Start Overtaking Bitcoin pic.twitter.com/qLNk4WARHh

— Stockmoney Lizards (@StockmoneyL) August 26, 2024

Withdrawal from Crypto Markets

Also, markets are pulling back again today after a monthly total cap high of $2.37 trillion on August 25th. The total cap has fallen 2.6% over the past 24 hours to $2.31 trillion at the time of writing.

Bitcoin has been on a steady downtrend, falling to $62,750 during the Asian trading session on Tuesday morning. It currently seems to be returning to its cap zone around the $60,000 price level.

Ethereum has shed 2.4% on the day, falling back to $2,680, while other altcoins were predominantly in the red.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!