After reaching historic highs of $43 billion, open interest has fallen back toward $42 billion, but it remains within historical highs. This indicates a rise in the number of open and unclosed Bitcoin futures contracts (long and short), which are at historic highs.
Looking at funding rates, when cryptocurrency funding rates show an upward trend, this indicates the dominance of long positions. Traders holding long positions are willing to pay short traders, indicating a prevailing bullish market trend.
When combined with high open interest, this indicates that the market is in a bullish mood but there is excessive buying.
This period may also witness a rise in leveraged positions, as traders may enter the market, capitalizing on the recent euphoria. However, caution is advised, as cumulative liquidations may occur in the event of a sharp price movement, resulting in partial or total losses for those holding leveraged positions. Cryptocurrency exchanges may be forced to close these positions, especially if funding levels indicate unusually high fees.
Written by Arab Chain
