Skip to main content

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

On-chain data shows the Bitcoin open interest is sharply rising, a sign that a long squeeze may be brewing in the crypto futures market.

Bitcoin Open Interest Has Observed Rise Recently, While Funding Rates Remain Positive

As pointed out by an analyst in a CryptoQuant post, the futures market may be heading towards a long squeeze in the near future.

The “open interest” is an indicator that measures the total amount of Bitcoin futures positions currently open on derivatives exchanges. It includes both long and short positions.

An increasing value of the metric suggests users are opening more positions right now. Such a trend can lead to higher volatility in the crypto’s price.

On the other hand, a lowing open interest can mean positions on exchanges are closing down. A rapid swing in the price can cause a mass liquidation, sharply taking the indicator’s value down.

Related Reading | Bitcoin Bearish Signal: Whale Ratio Continues To Stay At High Value

These liquidations cascade together, amplifying the price move. Such an event is called a long or short liquidation “squeeze” (depending on the direction of the price change).

Now, here is a chart that shows the trend in the Bitcoin funding rates over the past couple of weeks:

Looks like the value of the metric has moved up recently | Source: CryptoQuant

As you can see in the above graph, the Bitcoin open interest has observed a significant increase in the last few days.

The chart also includes the data of another indicator, the “funding rates.” This metric measures the periodic fee that futures traders have to pay each other.

A positive value shows there are more long traders in the market at the moment as they are paying a premium to keep their positions.

On the contrary, a negative value implies a short sentiment is dominant right now. Looking at the graph, it seems like the Bitcoin funding rate is positive currently.

This means that most of the recent increase in the open interest has to be because of new long positions opening.

Related Reading | Bitcoin Dominance Remains High As Market Sell-Offs Settle

Historically, a very high open interest has usually resulted in a liquidation squeeze. Since longs are dominant right now, a long squeeze is probable if the price observes a steep decline.

BTC Price

At the time of writing, Bitcoin’s price floats around $30.5k, up 1% in the last seven days. Over the past month, the crypto has lost 21% in value.

The below chart shows the trend in the price of the coin over the last five days.

The value of Bitcoin seems to have surged past the $30k mark | Source: BTCUSD on TradingView Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

from NewsBTC https://ift.tt/Vo3nycE
via IFTTT
Labels:

Comments

Post a Comment

Any questions, Please.

Popular posts from this blog

TA: Ethereum Remains Strong, Why ETH Could Rally Above $2.3K

Ethereum is trading in a positive zone above the $2,150 support zone the 100 hourly SMA against the US Dollar. ETH price is likely to rally if there is a clear break above $2,300. Ethereum is trading in a positive zone above the $2,100 and $2,150 support levels. The price is now trading above $2,100 and the 100 hourly simple moving average. There is a key bullish trend line forming with support near $2,140 on the hourly chart of ETH/USD (data feed via Kraken). The pair start a fresh rally above $2,300 as long as it is above the $2,000 support zone. Ethereum Price Is Showing Positive Signs After forming a base above $2,000, ethereum started a steady increase . ETH broke the $2,200 resistance zone and it settled nicely above the 100 hourly simple moving average. The price even spiked above the $2,250 resistance level. However, the price seems to be struggling to gain pace above $2,250, similar to bitcoin . A high is formed near $2,285 and ether is now correcting lower. There was...
Post a Comment
Read more

I Stand By My $100,000 Bitcoin Price Target, Anthony Scaramucci

Anthony Scaramucci has again reiterated his stand on why he thinks bitcoin will still hit the $100,000 price target he had earlier set. Scaramucci had put forth this forecast when he was on Yahoo! Finance earlier in the year. The founder explained that bitcoin could easily be trading at $100,000 in 12 months. Anthony Scaramucci who founded Skybridge Capital in 2005 has not always been bullish on bitcoin. But has slowly come around over the years and has now gotten into bitcoin. The CEO believes that more and more funds will get into bitcoin as time passes. His message to other money managers had been that he believed the performance of their funds will eventually be benched off of bitcoin. Related Reading |  Bitcoin Whale Warns Of “November 2018 Vibes.” What This Means Scaramucci took this one step further when he founded the Skybridge Bitcoin Fund early this year. An institutional-grade fund that was created specifically to invest in bitcoin, which it considers to be the larg...
Post a Comment
Read more

SubQuery raises $9M for Polkadot data protocol

Blockchain venture capitalists continue to fund Polkadot projects with growing conviction. SubQuery aims to bring data indexing infrastructure to the network. Decentralized data aggregator SubQuery has concluded a $9 million funding round to build Polkadot’s first data aggregation layer, a move that could strengthen data indexing for the emerging interoperability network. The investment funds will be used to continue building SubQuery’s data indexing infrastructure for all Polkadot and Kusama applications, the company announced Wednesday. SubQuery also announced the investment would help it expand its technical abilities and support the open-sourcing of its software. This investment round was co-led by Arrington XRP Capital, Digital Currency Group and Stratos Technologies with additional participation from Hypersphere Ventures, NGC Ventures, Wintermute and Skynet Trading. Previously, SubQuery successfully raised $1.8 million in a private seed round that concluded in March of this y...
Post a Comment
Read more