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Monday, January 18, 2021

Bitcoin Futures Suggest A Major Move Is On Its Way

Rallying at more than $16,000 in recent days, bitcoin has been experiencing major highs. Its unprecedented surge has surprised many stock market analysts. So much so that many stock market traders are hoping that BTC’s bullish results will impact other digital currencies as well. 

Recently, the bitcoin futures data has indicated that major changes are on its way. Experts have recommended traders to be ready to make big decisions soon. Open interest indicates the total numbers of trader contracts that are currently active in the stock market futures. So, when there’s high open interest, the total number of people trading on BTC is high. 

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As of now, the bitcoin’s open interest in the stock market futures is seeing an unprecedented level of high. Even if it might seem like a good thing, experts are warning that high open interest also means high volatility. 

Can Bitcoin Survive The All-Time Volatile Open Interest?

Mohit Sarout, a stock market expert from Bitazu Capital notes that bitcoin has always seen cascading liquidation after such value surges. Following the remark, it’s important to note that bitcoin is yet to see this phase. Does this mean that extreme volatility will lead bitcoin to liquidation soon? 

The higher BTC open interests go, the dangers of crumbling value surge get stronger. 

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Typically, bitcoin contracts give higher leverage if around 125x to traders. Depending on which platform they come from, traders can access anything between 1x and 125x. Since the position of leverage is big, the liquidation price is also near the entry price. As a consequence, the price of liquidation is also tighter. Taking all this into account, it’s no wonder that stock market analysts are getting nervous about bitcoin’s resilience. 

Across the futures markets, bitcoin’s average rate for funding stands at 0.01 percent. It shows a balanced market. Meaning that neither sellers now buyers are destabilizing the stock market. 

Other Options Are Also Seeing Higher Trading Activities

If we look at other BTC derivatives, we will notice that trading activities are increasing at a hyper rate. It’s a similar case with their open interests as well. 

In the last couple of days, Deribit also witnessed an unprecedented surge in open interest for bitcoin options. This is even more interesting because such peaks usually happened by the last days of a month. And given that the bitcoin open interest is already soaring, high volatility should be expected. 

The bitcoin options contract will expire by 27th November. 

Even though there’s much to worry about, stock market data reveals that traders are staying unfazed in front of a predicted highly volatile market. The BTC $525 million will expire soon. 

Many are saying that the huge expired BTC options will not make any major change as bitcoin is currently staying at $15,500. 

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