Bitcoin Sentiment Soars as Open Interest Shatters Highs

  • Bitcoin open interest (OI) is rising amid the asset’s impressive run in October.
  • Market observers have expressed optimism that the rising OI could lead to higher prices.
  • Technical analysts remain cautiously optimistic in the short term.

Bitcoin has lived up to the ‘Uptober’ hype in October 2023. Fueled by excitement over the potential approval of a spot exchange-traded fund (ETF), the asset is up over 28% in the month with less than two days to go.

Amid the impressive run, open interest (OI) on Bitcoin Options has reached a new high as volumes and open interest on the Chicago Mercantile Exchange (CME) surge, sparking optimism that the asset’s price run is set to continue.

Bitcoin Open Interest Rise Sparks Optimism

Bitcoin options OI surged to $16.96 billion, including crypto and traditional finance exchanges, on Friday, October 27, surpassing its peak of $14.9 billion formed in October 2021, combining data from The Block and Velo Data.

The rising open interest indicates that a significant amount of capital is flowing into the options market and comes amid an uptick in CME OI. The CME options OI has been in an uptrend in recent weeks, peaking at $1.59 billion on October 27, according to Velo Data. A similar trend has also been observed in the CME futures OI, as it threatens to topple Binance as the leading Bitcoin futures exchange.

At the time of writing, the prevailing theory is that institutional investors are positioning themselves for the imminent approval of a spot Bitcoin ETF. However, there have also been arguments that retail traders are doing their bit. The activity has boosted positive sentiments around Bitcoin as several observers suggest that it could push the asset’s price significantly higher. 

“Crypto Kid,” a prominent technical analyst who subscribes to this theory, pointed to the high number of call options as opposed to puts. At the time of writing, Coinglass data shows that there are 67.99% calls compared to 32.01% puts. Citing this disparity, Crypto Kid contended that the current OI could drive Bitcoin to $40k.

Call options refer to contracts allowing holders to buy an asset at a previously agreed price called strike price. On the other hand, put options refer to contracts allowing holders to sell at the strike price. 

The put-call ratio (PCR), calculated by dividing the number of puts by the number of calls, is generally used to gauge market sentiment. A PCR below 0.7 is typically seen as bullish and vice versa. The current data places this metric at around 0.47.

What is The Price Chart Saying?

Prominent technical analyst “Duo Nine” has suggested that Bitcoin’s next upswing could take it to $36k, though he suggested that the asset could also retest the $31k to $32k price range. Per the analyst’s chart, the asset currently faces resistance between the $34.8k and $35k price range, with support between $33.6k and $33.4k.

Duo Nine is not alone in his outlook, as “Mac” also expressed a similar view. The latter, however, appears more optimistic, setting a target of $37k. 

At the time of writing, Bitcoin is trading at $34.1k per CoinMarketCap data, representing a 0.79% decline in the past 24 hours. The asset has traded between the $33.4k and $34.8k price points over the past week.

On The Flipside

  • The SEC has yet to greenlight any Bitcoin spot ETF application.
  • Several factors affect Bitcoin’s price, including macroeconomic factors like inflation.

Why This Matters

The rising OI suggests that more investors are funneling capital into Bitcoin derivatives. The activity could have significant price implications.

Read this to learn more about CME’s rise in the Bitcoin futures market:
CME Almost Topples Binance as Top Bitcoin Futures Exchange

iSun’s CEO discusses the importance of collaboration between regulators and crypto businesses:
iSun CEO Urges Practical Crypto Regulation via Collaboration

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