According to the latest data, open interest on Binance has risen again to around $13.7 billion, close to its mid-to-late July highs.
What does this mean?
New (likely long) entries: A rising OI alongside a rising price indicates the entry of new speculative liquidity rather than just short covering.
Higher sensitivity to correction: When OI rises faster than the price, the move becomes leveraged, meaning any downward move could trigger a long squeeze.
Decision zone near 119–120K: This area acted as resistance in July. A retest with high OI makes a breakout possible but fragile; failure there could trigger a liquidation move toward nearby support levels.
Recent trajectory: After a late-July to early-August decline, in which both price and OI fell (indicating money leaving the market), the two have rebounded simultaneously a short-term confidence signal from contract traders.
OI near historic highs: We are still slightly below the ~14B peak. There is room for leverage to expand, but the gap is small, which increases the possibility that some of this leverage could be wiped out by negative news.
A daily close above 120K with stable or slightly declining OI would indicate that the upside is driven by short covering or spot buying, which is healthier and reduces the risk of liquidation. The next target would be 122–124K, ideally without a parallel surge in OI to avoid a risky, overleveraged rally.
A significant additional jump in OI without a corresponding price advance or with a price decline signals an overleveraged market vulnerable to liquidation. Conversely, a price rally or stability above 120K while OI does not rise (or falls slightly) suggests healthy spot flow and short covering
The intraday trend is bullish but represents a fragile upside because it is driven by increased leverage. A confirmed breakout would require stability above 120K with flat or lower OI. Any sharp rejection at 119–120K with high OI would point to a potential liquidation shakeout
Written by Arab Chain
