The total number of Bitcoin open interest at leading derivatives trading platforms including BITMEX is dropping. It is now at $1.37 billion at the time of going to press.
With this, it is likely that traders are exiting their longs position, possibly for stable coins like the USDT or fiat.
Bitcoin Futures Open Interest Rose above $1.5 billion
In late January and through the better part of February 2020—when the market was trending and Bitcoin testing highs of $10,500, the number of open interests, according to stats from Skew, soared past the $1.5 billion mark.
At one point, it looked to be edging closer to $2 billion at the biggest derivatives trading platform in the world, BitMex.
Now, it seems the table is turning and bears are in a pole position.
At $1.37 billion, a 7% decline from the $1.5 billion mark, traders appear to be risk aversive, preferring safety over aggressiveness.
Bears in Charge
In line with this decrease, BTC prices are on a downtrend. The last 24 hours have seen a 3.5% drop, pushing weekly gains to 7%.
Concurrently, Bitcoin’s dominance remains low.
However, this drop could be attributed to the stellar performance of altcoins over the last few days.
Outperforming Bitcoin by several orders, coins like Tezos and at some stage Ethereum rallied, posting double digit gains against BTC.
This price expansion led market participants to speculate, swapping their BTC holdings for alts, reducing dominance.
Coronavirus and central banks easing supportive of bulls
With BTC and the crypto market falling, the number of open interests for BTC products across exchanges including OKEx and BitMex will most likely continue to drop even though fundamental factors are supportive of bulls.
Although recent news reveal that the SEC failed to approve a Bitcoin ETF, global events including halving could pump the coin in the immediate term.
Notably, the effect of coronavirus cannot be underestimated. The flue-like disease is wreaking havoc in parts of China and new cases continue to be reported elsewhere.
As the stock market wobbles and central banks slash interest rates to shore economies, the impact of inflation will force investors to safe havens of which Bitcoin, though volatile, is prominent.
