12:00 p.m
3
min reading ▪ acc
Bitcoin seems to be at a crossroads. Speculative frenzy grows in the shadows as crypto nears $70,000. A phenomenon that could turn against him in the short term. With the explosion of open interest in the futures markets, BTC finds itself in a high-risk situation. The question is: Will the current bullish momentum hold up in the face of this rampant speculation?
Tensed rise in the price of Bitcoin
Bitcoin broke the $69,500 mark on October 21, a milestone marked by euphoria. Behind this spectacular rise, however, doubts are beginning to emerge. This level has not been reached in months and market participants are more nervous than ever.
The political context appears to play a major role, particularly the potential impact of the US election. Some analysts even mention a correlation between the rise of Bitcoin and Donald Trump’s chances of winning the presidential election.
But beware, this skyrocketing price is not without risk. Indeed, open interest (OI) in futures contracts has reached all-time highs.
However, such an increase in open positions for Bitcoin is not always synonymous with stability. If traders’ speculations do not materialize, the market could be hit by a sharp correction that would reverse the current bullish momentum.
Snowball effect of open interest
As the report notes, the explosion of open interest is not just a technical matter.
In theory, a high OI reflects rising optimism, but here it could cause the opposite effect. If the spot market does not follow the expected upward momentum, we could witness an unexpectedly sharp correction in Bitcoin.
The market then becomes vulnerable to what is called a “short squeeze,” where open positions are liquidated in a cascade, increasing volatility.
Most worryingly, the fundamentals are clouded by this speculation. The more the market swells with unfulfilled promises, the sharper the fall can be.
So the next few days will be decisive as to whether Bitcoin will break through this resistance or whether it will undergo a return to reality that could shake the entire market. Some still hope to see Bitcoin at $80,000.
Maximize your Cointribune experience with our “Read and Earn” program! Earn points for every article you read and get access to exclusive rewards. Register now and start reaping the benefits.
Fascinated by Bitcoin since 2017, Evariste continued to research the topic. If his first interest was trading, now he is actively trying to understand all the developments focused on cryptocurrencies. As an editor, he strives to consistently deliver high-quality work that reflects the state of the industry as a whole.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.
Comment