Bitcoin Approaches Crucial Level As Open Interest Concerns Abound: Bitfinex

Bitcoin (BTC) is approaching a crucial price range, which analysts say will be the first real test of resistance. The cryptocurrency topped $69,500 on October 21, smashing the level last seen in late July when pro-Bitcoin US presidential candidates Donald Trump and Robert F. Kennedy delivered highly publicized speeches expected at the Nashville Bitcoin Conference.

Despite the sustained upward momentum, there has been increasing speculation in the futures market as open interest climbs to new highs.

Bitcoin Price and Trump Election Odds

A report from crypto exchange Bitfinex revealed that market participants are speculating about a correlation between bitcoin price action and the odds of Trump winning or losing the upcoming US presidential election.

Analysts said the odds of winning appear to be strongly tied to BTC’s price rises, suggesting that speculation about its possible victory may have driven most of the recent gains. This correlation intensified since Trump publicly stated possible reforms within the Securities and Exchange Commission (SEC) and potential tax policies that would favor crypto investors.

“As such, an interaction between political dynamics and cryptocurrency prices is increasingly evident, with market participants closely monitoring the evolving electoral landscape as they assess future price movements for Bitcoin and other digital assets “, analysts said.

Bitcoin was changing hands at $67,500 at the time of writing, just a few thousand dollars away from the important $70,000 level. Sustained interest in the spot market, driven by macroeconomic tailwinds such as the election outcome, could lead to a final breakout of bitcoin’s eight-month consolidation range. Conversely, weak one-time demand could lead to another rejection of the range highs.

Increasing OI could be harmful

As BTC continues to test its resistance level, global open interest (OI) for the perpetual and futures trading pairs is rising to new highs. The metric recently reached $40.38 billion, indicating growing speculation in the futures market.

While a rise in open interest is often seen as a sign of bullish sentiment among investors, Bitfinex analysts insist it could have implications for bitcoin’s price dynamics as traders get ahead of potential moves of the market This dynamic could not be healthy for the market, leading to more volatility and sharp corrections, especially if the speculations do not align with the underlying fundamentals of the market.

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