Bitcoin Price Starts Uptober With Record Open Interest Increase, BTC Rally Will Be Short lived?

The Bitcoin terms is erstwhile again trading supra $20,000, its 2017 all-time high, with bullish momentum connected debased timeframes. The cryptocurrency has been successful a akin concern since losing this level aboriginal successful 2022, leaving galore traders to wonderment if the bulls volition beryllium capable to prolong the existent terms action.

At the clip of writing, the Bitcoin terms trades astatine $20,100 with a 4% nett successful the past 24 hours and a 5% nett successful the past 7 days, respectively. Other cryptocurrencies successful the apical 10 by marketplace capitalization are pursuing Bitcoin with Binance Coin (BNB) outperforming the ranking signaling an 8% nett implicit the aforesaid period.

BTC’s terms moving sideways connected the 1-hour chart. Source: BTCUSDT Tradingview

Bitcoin Price Open Interest Hints At Fresh Bear Assault?

Data from Arcane Research shows that the Bitcoin terms existent terms enactment has been followed by a spike of Open Interest (OI) successful the derivatives sector. BTC futures contracts person been expanding since the commencement of October, arsenic marketplace participants stake connected aboriginal appreciation for the cryptocurrency.

As seen successful the illustration below, the OI denominated successful BTC reached a monthly precocious of 464,500 BTC with the Bitcoin terms rallying northbound to $20,000. The spike successful OI arsenic the terms trends to the upside successful October indicates that traders are taking agelong positions.

As seen successful the chart, this is not the archetypal clip this period that longs rushed into the terms action. In Late September, OI skyrocketed with the price, and longs were flushed arsenic the Bitcoin terms returned to its erstwhile enactment levels, volition past repetition this clip little than a week from that downside move?

Source: Arcane Research

Major Upside Rally For The Bitcoin Price Could Be In The Making

On higher timeframes, further information from Arcane Research shows a spike successful Open Interest arsenic the Bitcoin terms trends to the downside. The metric has been moving upwards since April 2021 erstwhile it saw a flimsy alteration aft BTC’s terms crashed from $64,000.

At that time, the cryptocurrency recorded its archetypal all-time precocious of that year. In the months after, the Bitcoin terms made a re-test of the highs and reached uncharted territory arsenic the OI determination sideways, the biggest spike was recorded arsenic BTC crashed and entered a carnivore marketplace reaching its existent levels.

Source: Arcane Research

In different words, traders stay comparatively level arsenic BTC deed $69,000, but began shorting astatine a precocious gait arsenic the cryptocurrency trended to the downside. This magnitude of short-sided Open Interest could supply capable substance for different bull tally oregon astatine slightest mightiness supply capable enactment for Bitcoin to reclaim antecedently mislaid territory.

Arcane Research expert Vetle Lunde commented the pursuing connected this spike successful Open Interest and its imaginable implications for the Bitcoin price:

The maturation since May is genuinely remarkable. We volition spot vivid markets whenever these positions get (un)willingly closed out.