Bitcoin has climbed back toward the $110,000 mark, but Open Interest data could raise questions about the sustainability of the rally.
Since falling into the low $105,000 levels on Tuesday, Bitcoin has seen some fresh momentum that has so far culminated in it reclaiming the $109,000 level and even making a brief retest of $110,000.
Below is a chart that shows how the recent trajectory of the coin has looked.
On the other hand, the indicator going down implies the holders are either closing up positions of their own volition or getting forcibly liquidated by their platform. Due to the flush of leverage, such a trend can lead to the asset behaving in a more stable manner.
Now, here is a chart that shows the trend in the 24-hour change of the Bitcoin Open Interest over the last month:
As is visible in the above graph, the 24-hour change in the Bitcoin Open Interest registered a sharp spike alongside the rally, indicating that investors opened up a large number of positions.
This isn’t anything unusual, as speculative activity tends to rise when significant price action occurs in the market. The scale of the spike, however, could be worth taking note of.
As the analyst has highlighted in the chart, the spikes of a similar order in the last month generally coincided with tops in the cryptocurrency’s price. It now remains to be seen whether the same pattern will play out this time as well.
