Bitcoin Futures Open Interest Reaches Yearly High of $12 Billion

The dollar value locked in the number of open bitcoin futures contracts is increasing, indicating growing speculative interest in the market and potential for price volatility. An uptick in open interest alongside a price rally is said to confirm an uptrend.

Data from CoinGlass shows the nominal value of open interest has reached a yearly high of $12 billion, marking a 7% gain for the month.

In the past month, bitcoin’s price has rallied 15%, to $28,439 thanks to an increasing appetite for risk assets and a “flight to quality” within crypto.

An increase in open interest means new money is flowing into the market but doesn’t reveal much about whether traders are positioning for price gains or price losses.

In bitcoin’s case, the new money seems to be betting on price gains, considering the funding rate or the cost of holding bullish long/bearish short positions has flipped into the green after spending most of the early parts of the Asia trading day in the red.

Positive funding rates usually indicate a bullish trend, as long positions compensate short positions; conversely, negative funding rates indicate bearish sentiment as short positions receive payment from those holding long positions.

A Taipei-based trader at Quantrend Technology, a large market maker on Binance, told CoinDesk in a note that bitcoin has hit the highest level since the collapse of Luna last year, which is also a positive psychological indicator that market sentiment is optimistic.

The all-time record for open Bitcoin futures contracts comes from April 15, 2021, when it reached $23.8 billion across all platforms. This was followed by $23 billion on Nov. 10, 2021, which marked the end of the bull market.

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