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Kezako? A discreet but oh so important metric is making a higher one on Bitcoin: that of open interest. The latter is on heights, and we are a few points from a record over 100 days.
Open interest on Bitcoin
This notion of open interest will be new to many, and it is normal. It is a rather "advanced" notion of finance, which does not mechanically imply that understanding and following it offers an advantage in the market. Reading data is complicated, time consuming and often irrelevant.
Open interest represents the amount of dollars positioned on the derivative of an asset. Isn't it simple? Let's take 2 examples:
- I am selling BTCUSD on the future perpetual of BitMex. My position is $ 50,000. Open interest will therefore increase by $ 50,000.
- I buy the perpetual future BTCUSD on FTX. My position is $ 50,000. Open interest will therefore increase by $ 50,000.
The open interest on these 2 positions will be brought to a total of $ 100,000.
The RO is therefore a rather specific indicator. It does not indicate a direction, but rather fairly indicates the financial and psychological capacity of market operators to make a financial commitment, to express their convictions by taking a position. The RO is therefore an indicator of market intensity.
- The higher the OI, the more the population studied is convinced. This implies that a lot of money is on the market, in particular stop losses to protect purchases / sales;
- The lower the OI, the more the population studied doubts and is afraid. This is a context where volatility will generally be lower, and where market operators will have a significant risk aversion.
Open interest is therefore an indicator of the intensity of the match played on the market, and it is non-directional. Here is for example a possible reading of a phenomenon that I consider rare when Bitcoin went to touch the $ 10,500: Bitcoin rubs the 10,500 dollars, and pricks itself!
Record or not record?
The total dollar amount positioned on futures contracts therefore reached a new record. Be careful though: this indicator is non-directional, and it could therefore be both purchases and short sales.
106-day ATH - $ 2.197 trillion positioned on Bitcoin futures
The data provided by Glassnode concerns Huobi, Binance, Bifinex, BitMEX, Deribit and FTX. They are therefore partial, and the data missing from platforms reputed for their futures contracts, such as OkEx, are missing.
Another data provider is Skew, which provides aggregated open interest for a larger number of platforms. It includes the contracts of CME, bakkt ... and OkEx!
ATH or not ATH?
As you can see from the graph, the Skew data is slightly different. No record yet, but OI is close to its previous highs, a sign of a particularly strong market.
Two elements to conclude:
- The situation is very similar on Ethereum;
- Volumes on futures are becoming lower, a sign that if the cumulative conviction of the market is strong, fewer and fewer investors tend to take a position.
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