#BTCBreaksATH110K Leveraged speculation in the Bitcoin futures market is at extremely high levels as traders await new highs.
Open interest (OI) in Bitcoin futures has reached record levels on cryptocurrency derivative exchanges, as traders anticipate that the cryptocurrency will continue to rise and reach new all-time highs.
Open interest in Bitcoin futures
BTC
97,895 €
peaked at just over 80 billion dollars on May 23, according to CoinGlass data. This represents a 30% increase since early May, as derivative speculators increase their leverage expecting higher Bitcoin prices.
Open interest is the total number of outstanding futures contracts that allow traders to bet on the future price of Bitcoin, which have not yet been settled or closed, showing the total amount of current speculation in the market.
When OI increases dramatically, it indicates that large leveraged positions are being accumulated in the market, with many traders holding significant positions with borrowed money.
If the price of Bitcoin moves against these over-leveraged positions, traders are forcibly liquidated, and this liquidation can create selling pressure on Bitcoin, which can cause a rapid price drop and high volatility.
However, analysts suggest that the increase in inflows into spot Bitcoin exchange-traded funds (ETFs), which have seen more than 2.5 billion dollars this week, may counteract some of that excessive leverage.
Bitcoin options markets show a similar pattern, with open interest of over 1.5 billion dollars at strike prices of 110,000 and 120,000 dollars on the Deribit exchange. There is also over 1 billion dollars in OI at strike prices of 115,000, 125,000, and 130,000 dollars.
Around 2.76 billion dollars in notional value contracts are set to expire on May 23, with a put/call ratio of 1.2%, meaning there are more short sellers (puts) than long buyers (calls), and a maximum pain point of 103,000 dollars, where most losses will be incurred at expiration, according to Deribit.
