Analysts say falling Bitcoin open interest “will give way to further highs”

The weekend is just around the corner and fear remains the prevailing short-term sentiment in the cryptocurrency market. Bitcoin (BTC) price fell to $ 47,250 this morning and investors are biting their nails after US consumer price index (CPI) data shows inflation hit a forty-year high of 6.8%.

Data from Cointelegraph Markets Pro and TradingView show that a midday push by the bulls to regain the $ 50,000 support level was easily defeated, with sellers sending the price below $ 48,000, which could potentially force another lower daily high for the prime cryptocurrency.

BTC / USDT 4-hour chart. Source: TradingView

With the prospect of a big price hike towards the end of the year almost frustrated, traders have turned their attention to managing risk and identifying the best levels for buying declines. Here’s a look at what analysts are saying about the outlook for Bitcoin through 2022.

The elimination of open interest “will give way to a greater advantage”

Analysts say falling Bitcoin open interest “will give way to further highs”
Analysts say falling Bitcoin open interest “will give way to further highs”

As seen in previous instances where the price of BTC has seen a rapid decline, BTC’s open interest (OI) in derivatives exchanges has declined significantly, as highlighted in a recent report by Delphi Digital. The report noted a 50% drop in OI following this recent market slowdown as long-over-indebted positions were decimated.

Open interest of BTC futures versus the price of BTC. Source: Delphi Digital

While the experience was likely daunting to traders who were overly exposed, analysts suggested that deleveraging from events like this is beneficial in the long run and will often “give way to further benefits” as froth and previous excesses of exuberance are replaced by a more measured one to be replaced business environment.

The sharp drop in OI (Open Interest) last month could also suggest that the near-term low for BTC may have been reached, according to Delphi Digital, and the current sale may have reached the point of exhaustion.

Delphi Digital says:

“The 30-day decline in OI for BTC has hit levels that previously indicated a bottom was forming (or not too far away).”

Limited range trading for BTC until 2022

According to Ben Lilly, co-founder of Jarvis Labs, the price of Bitcoin “will stay in this trading range at least until the end of the month,” mainly due to the fact that the 31st terms of open contracts “.

As part of the rationale, Lilly highlighted previous instances of major drawdowns that resulted in a large number of sell-offs and stated that it usually took the market some time to build momentum after those drawdowns.

Open interest for BTC futures. Source: espresso

Lilly said

“Fortunately, this is a great setup for anyone looking to accumulate weekly or at the bottom of the current trading range.”

Should traders be looking for the continuation of the uptrend?

The analyst and pseudonymous Twitter analyst “Rekt Capital” provided final information and released The following BTC price quote chart between two major exponential moving averages.

1 week chart for the BTC / USD pair. Source: Twitter

Rekt Capital said:

– Overall, BTC is currently consolidating within the two main EMAs. Like in May 2021. And like in May … Sustained price stability and consolidation between these two EMAs will precede the continuation of the new bullish macro-interest rate trend. “

The global market capitalization of cryptocurrencies is now $ 2.238 trillion and Bitcoin’s dominance index is 40.7%.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Every investment and trade involves risk, you must do your own research when making a decision.

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