Bitcoin Open Interest Hits Record High, What Does It Mean For BTC Price?

Bitcoin chain metrics are showing bullish signs. Open interest in the cryptocurrency has just reached an all-time high and demand is growing at a rapid monthly rate.

Data from market intelligence platform CryptoQuant shows that open interest in bitcoin has reached an all-time high of $19.8 billion. Pseudonymous analyst EgyHash said this points to bullish sentiment among traders.

Bitcoin open interest reaches $19.8 million

In addition to the increase in open interest, bitcoin funding rates have reached their highest positive levels since August. This is an indicator that the majority of open interest is in favor of long BTC positions.

In addition, the positive trend of bitcoin funding rates indicates an increasing influx of liquidity and increasing investor attention in the crypto space.

With increasing liquidity, there is generally an increase in demand. CryptoQuant’s head of research, Julio Moreno, noted over the weekend that there has been an increase in demand for bitcoin and that it has been growing at the fastest monthly rate since mid-April 2022.

Demand recovers

CryptoQuant CEO Ki Young Ju tweeted on Tuesday that the apparent demand for bitcoin is “back.” Apparent demand refers to the difference between production and inventory changes, i.e. the difference between mined BTC and the supply that has been idle for more than a year. He explained that if the decrease in inventory exceeds production, demand increases.

It’s worth noting that while demand is recovering, momentum remains in negative territory, indicating that traders are still selling more than they’re buying. However, the scale of this imbalance has narrowed.

This increase in demand is evident in inflows into US spot Bitcoin exchange-traded funds (ETFs). Inflows into ETFs doubled from $253 million on Friday to $555 million on Monday, with nine out of ten funds posting positive numbers for the first time in weeks.

Bitcoin ETFs located in the United States could see higher inflows in the coming weeks as more ETF investors plan to invest in crypto products. A recent survey by American multinational financial services company Charles Schwab revealed that approximately 45% of ETF investors are interested in crypto products and intend to invest in them soon.

Meanwhile, CryptoQuant has stated in previous reports that more demand is needed to push the price of bitcoin (BTC) to new highs. It remains to be seen how far the cryptocurrency can rise from its current price of $65,500 in the coming weeks.

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