Bitcoin (BTC) May Have 'More Room to Fall” as Open Interest (OI) Continues to Rise

In a post on X on Aug. 16, CoinGlass noted that it was “a bit unusual” that open interest has not reacted to Bitcoin BTCUSD prices.

Crypto analysis platform CoinGlass has observed that Bitcoin (BTC) may still have “more room to fall” as open interest (OI) has continued to rise amid recent price action.

In a post on Twitter on Aug. 16, CoinGlass noted that it was “a bit unusual” that open interest has not reacted to Bitcoin prices.

The platform reported that total OI on Bitcoin futures reached $29 billion on Aug. 16 and has been rising all week, while spot BTC prices have declined 5% over the past couple of days.

Open interest refers to the total number of Bitcoin futures contracts that have yet to be settled or expire.

“An increase in open interest means that both long and short positions are increasing,” the firm said.

Rising OI means there’s more leverage in the market, which can amplify movements in either direction.

This happened on Aug. 5, when leverage was flushed out, resulting in BTC dumping 20% in less than a day.

CoinGlass data also indicates that funding rates were negative. Negative funding rates in crypto derivatives markets occur when the price of the contract is trading below the spot price of the underlying asset.

This scenario could discourage traders from holding long positions, as they must pay to maintain these positions and incentivize more short positions.

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