Investing in Web 3.0: Why Bitcoin Open Interest Passing $15B is a Warning

As analysts focused on the rapidly expanding open interest, Bitcoin (BTC) dropped to around $34,500 on Nov. 7.

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Open interest “surge” spooks Bitcoin pundits

Data from Cointelegraph Markets Pro and TradingView indicated BTC price was trying to reclaim $35,000 as support.

The biggest cryptocurrency had no clear path ahead of the Wall Street open, but market players forecasted volatility would soon return.

The cause, they said, was a sharp boost in open interest (OI) on derivatives markets.

“Almost 10k BTC (~$350MM USD) in open interest added today. Fireworks soon,” financial commentator Tedtalksmacro stated on the day.

As Cointelegraph reported, open interest reaching high levels has coincided with bouts of volatility in recent months.

Commenting on current levels, which totaled nearly $15.5 billion at the time of writing per data from CoinGlass, James Van Straten, research and data analyst at crypto insights firm CryptoSlate, described the fluctuations as “noticeable.”

“The CME exchange, preferred by institutional investors, has achieved a new record in open interest, with 105,380 BTC contracts open, valued at $3.68 billion. Binance has edged past this figure with open interest of approximately 113,500 BTC,” he noted.

The sense of uncertainty over how the OI phenomenon would play out was shared by J. A. Maartunn, a contributor to on-chain analytics platform CryptoQuant.

In analysis the day prior, he suggested that OI was now in territory which had previously seen 20% BTC price drawdowns.

“Historically, whenever this metric surpassed $12.2 billion, it resulted in a minimum 20% decline in bitcoin price,” he wrote on X, saying that OI deserved “significant attention.”

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Analysis: $36,000 BTC price “off the table” this week

Skew, a well-known trader, highlighted the importance of current prices on short-term charts. He said that those who are wrong about the direction of the price will face difficulties, which could lead to a volatile price movement.

Looking ahead, Material Indicators concluded that $36,000 would be the most the price could reach in the near future. “Calling a local top at $36k doesn’t mean >$36k is off the table this year, but the metrics I’m looking at indicate that at the very least, it’s off the table for this week,” read the analysis from Nov. 6.

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