Bitcoin has room to move lower due to ‘unusual’ open interest: CoinGlass — TradingView News

According to crypto analytics platform CoinGlass, Bitcoin may still have “more room to go” as open interest (OI) has continued to rise in response to recent price action.

In a post on X on August 16, CoinGlass noted that it was “somewhat unusual” that open interest had not reacted to Bitcoin. BTCUSD Prices.

“I think there is still room for improvement.”

The platform reported that total OI in Bitcoin futures reached $29 billion on August 16 and has been increasing throughout the week, while BTC spot prices have fallen 5% in recent days.

Open interest is 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 company said.

A rising OI means there is greater leverage in the market, which can amplify moves in either direction.

This happened on August 5th when leverage was removed, causing BTC to fall 20% in less than a day.

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

This scenario could discourage traders from holding long positions as they would have to pay to maintain those positions and would incentivize further short positions.