Rollercoaster Week of Bitcoin: Will Derivatives Trigger a Bounce?
Over the course of the last day, Bitcoin (BTC) saw notable increases, rising 0.85% to reach $106k after falling to $103k, which was its lowest level of the week. However, as of this writing, it had dropped by 6.08% to $103,753.
According to analysts, Bitcoin might see a significant rebound this week in light of the recent events in the derivatives market. The main elements that can affect this movement were covered in AMBCrypto’s analysis.
Traders Turn Bullish as Bitcoin Derivatives Market Heats Up
According to CryptoQuant’s Taker Buy/Sell Ratio, the buying volume of Bitcoin has somewhat recovered its power. The ratio just surpassed 1 for the first time since April 17. An indication that traders are feeling more confident and are taking long bets in hopes of making a greater profit.
A rise in Bitcoin’s open interest has coincided with this increase in purchases. There was an increase from $33.3 billion to $33.7 billion in open interest, which represents the entire value of unresolved derivative contracts in the market.
More contracts have likely been opened in recent days, as shown by the $400 million increase. Given the increase in open interest and price growth, it’s possible that the majority of these new contracts are from purchasers.
Bitcoin Faces Risk of Sharp Drop as Open Interest Signals Correction
There’s a catch, though. Although the increase in open interest has helped Bitcoin’s price rise recently, there is a chance that it will fall precipitously. In fact, prior 20%–25 % dips have resulted in price reductions of 7%–21 %, forcing the asset into corrective phases, according to Bitcoin’s Open Interest chart.
This suggests that Bitcoin might be approaching this stage. Bitcoin had only fallen 6.08% at the time of writing, and a sharp decline may cause the commodity to fall by as much as 20%.
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