By | January 4, 2022


On-chain information reveals Bitcoin open curiosity has reached dangerously excessive values, an indication {that a} leverage flush could also be coming quickly.

Bitcoin Open Curiosity Rises To Excessive Values

As identified by an analyst in a CryptoQuant submit, the BTC open curiosity has now reached values the place mass liquidations have taken place up to now.

The “open curiosity” is an indicator that measures the full quantity of BTC futures positions at the moment open on derivatives exchanges. The metric accounts for each lengthy and quick positions.

When the worth of the metric is low, it means traders aren’t utilizing a lot leverage proper now. Such values normally lead to low volatility within the worth of Bitcoin.

However, excessive values of the indicator recommend that futures contract customers are at the moment utilizing a excessive quantity of leverage. This case can result in excessive volatility available in the market as massive worth swings can lead to a liquidation squeeze.

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Now, here’s a chart that reveals the pattern within the BTC open curiosity over the previous 12 months:

The indicator's worth appears to be on the rise not too long ago | Supply: CryptoQuant

As you possibly can see within the above graph, worth of the Bitcoin open curiosity seems to be to be climbing up in the previous couple of weeks.

The quant has marked within the chart the earlier instances the indicator confirmed equally excessive values. It’s clear that sooner or later after reaching these values, the metric has had a pointy decline.

The sudden lower within the open curiosity implies {that a} leverage flush occurred at these instances. Such a squeeze occurs when liquidations cascade collectively in response to a swing within the worth of Bitcoin.

Throughout such leverage flush incidents within the interval of the chart, the value of the crypto additionally appears to have crashed alongside it. Because of this these earlier liquidations principally concerned lengthy positions.

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For the reason that market appears to be overleveraged proper now as hinted by the open curiosity values, it’s doable the same liquidation occasion might happen within the close to future.

BTC Worth

On the time of writing, Bitcoin’s worth floats round $46.7k, down 5% within the final seven days. Over the previous month, the coin has misplaced 12% in worth.

The under chart reveals the pattern within the worth of BTC over the past 5 days.

Bitcoin Price Chart

BTC's worth appears to have struggled in the previous couple of days | Supply: BTCUSD on TradingView

Prior to now week, Bitcoin appears to have once more began consolidating within the $45k to $50k vary. It’s unclear in the intervening time when the coin could escape this sideways motion, but when the open curiosity is something to go by, a liquidation occasion could occur quickly.

Featured picture from Unsplash.com, charts from TradingView.com, CryptoQuant.com

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