Bitcoin On-Chain Data Signals A Long Squeeze Brewing In Futures Market

On-chain knowledge reveals the Bitcoin open curiosity is sharply rising, an indication {that a} lengthy squeeze could also be brewing within the crypto futures market.

Bitcoin Open Curiosity Has Noticed Rise Just lately, Whereas Funding Charges Stay Optimistic

As identified by an analyst in a CryptoQuant post, the futures market could also be heading in direction of a protracted squeeze within the close to future.

The “open curiosity” is an indicator that measures the overall quantity of Bitcoin futures positions at present open on derivatives exchanges. It contains each lengthy and quick positions.

An rising worth of the metric suggests customers are opening extra positions proper now. Such a development can result in increased volatility within the crypto’s worth.

Alternatively, a lowing open curiosity can imply positions on exchanges are closing down. A speedy swing within the worth may cause a mass liquidation, sharply taking the indicator’s worth down.

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These liquidations cascade collectively, amplifying the worth transfer. Such an occasion is known as a protracted or quick liquidation “squeeze” (relying on the path of the worth change).

Now, here’s a chart that reveals the development within the Bitcoin funding charges over the previous couple of weeks:

Appears like the worth of the metric has moved up not too long ago | Supply: CryptoQuant

As you possibly can see within the above graph, the Bitcoin open curiosity has noticed a major enhance in the previous couple of days.

The chart additionally contains the info of one other indicator, the “funding charges.” This metric measures the periodic price that futures merchants should pay one another.

A optimistic worth reveals there are extra lengthy merchants out there in the mean time as they’re paying a premium to maintain their positions.

Quite the opposite, a detrimental worth implies a brief sentiment is dominant proper now. Wanting on the graph, it looks like the Bitcoin funding fee is optimistic at present.

Which means that many of the latest enhance within the open curiosity needs to be due to new lengthy positions opening.

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Traditionally, a really excessive open curiosity has normally resulted in a liquidation squeeze. Since longs are dominant proper now, a protracted squeeze is possible if the worth observes a steep decline.

BTC Worth

On the time of writing, Bitcoin’s worth floats round $30.5k, up 1% within the final seven days. Over the previous month, the crypto has misplaced 21% in worth.

The under chart reveals the development within the worth of the coin during the last 5 days.

The worth of Bitcoin appears to have surged previous the $30k mark | Supply: BTCUSD on TradingView

Featured picture from Unsplash.com, charts from TradingView.com, CryptoQuant.com