With a market valuation of $729 billion, the price of bitcoin is currently down 1.17% at $37,300, suggesting that the cryptocurrency is under pressure. There will probably be more Bitcoin liquidations with a notable increase in the Open Interest (OI) as the price of BTC falls below $37,500 levels.
Open Interest In Bitcoin In Danger Zone
The Open Interest (OI) for Bitcoin derivatives has increased significantly, as noted by well-known cryptocurrency trader CrediBULL crypto. This suggests that rather than being cleared out of the market (washed out), a large number of leveraged traders positioned themselves for this price decline. This is not optimal as it implies that leveraged positions are still common, which raises the risk of the market.
The analyst went on to say that the fact that OI was mentioned as being back in the “danger zone” implies that the market is unstable and has a high level of leverage, which could lead to further volatility. He makes the observation that the market may not always have a clear direction due to this increased volatility.
A “major short squeeze,” which occurs when short sellers cover their positions and cause a sharp price increase, or a “continued flush back down,” which occurs when there is a steady price decline, are the two scenarios that are mentioned.
It could be safe to enter a position if there is a short squeeze that results in a price rebound above a particular level (37.6k). However, there might be a chance to purchase at a reduced price if there is a protracted squeeze and the price drops.
Two Potential Bitcoin Scenarios
A standard chart is used by a crypto analyst to depict two potential scenarios. Here is the analysis as of right now:
- Recovering Local Lows Scenario: Should the market manage to recover and reclaim the most recent local lows, you might want to think about engaging in short liquidations (liqs) with a target range of 38k to 38.2k.
- Unable to Take Back Local Lows Situation: Take into consideration taking long liquidations (liqs) in the range of 36.6k to 36.9k if the market is unable to rebound and regain the most recent local lows.