Data shows the Bitcoin Funding Rates are still calm across the exchanges, a sign that investors haven’t developed excessive hype around BTC yet.
Here is the chart shared for the metric shared by the analytics firm in the report:
As displayed in the above graph, the Bitcoin Futures Open Interest registered an uptick when the recent price recovery run first began, but as the cryptocurrency’s surge has continued, the indicator has seen a sharp drawdown.
Investors who were betting against the asset during the rally were likely caught off-guard and a large amount of them ended up crossing the liquidation threshold.
Prior to the short squeeze, the Bitcoin Open Interest was sitting at a value of 370,000 BTC, but today it has come down to 336,000 BTC, implying a decrease of around 10%. “This reduction gives us a sense of scale for how large the short squeeze was,” notes Glassnode.
Generally, an increase in the Open Interest can lead to more volatility for the asset, as it raises the risk of a violent mass liquidation event taking place. A decrease, on the other hand, can lead to calmer price action.
Thus, with the 10% drop that the Bitcoin Open Interest has seen recently, it’s possible that another squeeze may be less probable to happen and the market could behave in a more stable manner.
While the trend in the Open Interest tells us about the total situation of the sector, it doesn’t contain any information about how the positions divide between shorts and longs. Another metric called the Funding Rate can can be helpful for knowing that.
As is visible in the graph, the Bitcoin mean Funding Rate is positive right now, which suggests the long investors are dominant. That said, the bullish sentiment isn’t too strong when compared to the past, as the metric’s value is just 0.007%.
Bitcoin has been moving sideways recently as its price is still trading around the $103,800 mark.
