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Breaking News: Dogecoin (DOGE) Soars 8%, But An Uptick In This Metric Suggests A Pullback
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Breaking News: Dogecoin (DOGE) Soars 8%, But An Uptick In This Metric Suggests A Pullback
crypto bitcoin fireworks

Crypto Fireworks Yet to Come As BitMEX Open Interest Remains Over $1 Billion

Tony Spilotro by Tony Spilotro
3 years ago
in Cryptocurrency news, Bitcoin
Reading Time: 3 mins read
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Over the weekend, Bitcoin broke back above $10,000 for the first time in 2020, but an abrupt selloff caused an over $250 drop in less one minute and pushed the crypto asset back below the important psychological level.

But neither the move up or the rejection has caused a significant change in BitMEX Open Interest, suggesting that the fireworks the market is expecting have yet to come.

Bitcoin’s Move Above $10,000 And Back Below Cause Drop in Open Interest

The crypto market and asset valuations are heavily determined by retail traders on top crypto exchanges doing battle via buy and sell orders of Bitcoin and altcoins.

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No platform is more dominant in that respect – often dictating the ebb and flow of the crypto market itself – than BitMEX.

Related Reading | Bitcoin is Setting Up For a Violent Long Squeeze, Which May Trigger New Lows

As more and more traders get into position on that platform, it causes a rise in a metric called Open Interest.

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Open Interest represents all of the cumulative value currently in position, ready to profit – or suffer losses – from the next major price movement in Bitcoin and altcoins.

For the past few weeks, Open Interest has been soaring, rising to some of the highest levels the metric reaches before a massive move occurs, and Open Interest cools down while the short-term trend is chosen.

bitmex open interest crypto bitcoin

Each time Open Interest spikes above $1 billion in USD value, or over 100,000 BTC at stake, an exceptionally powerful move will occur as a result of all the traders in position.

Depending on the direction of the movement, many of the traders in position will take profit while others get liquidated or stopped out at a loss. The resulting action causes Open Interest to reduce to normal, stable levels before the cycle repeats.

Right now, even despite a slow and sustained move to above $10,000, and a subsequent, few hundred dollar rejection to below the key FOMO trigger level, Open Interest remains well over $1 billion and 100,000 BTC, suggesting that the fireworks the crypto market has been expecting haven’t arrived yet.

Clearly, it’s going to take a much more explosive move to cause traders to alter their positions. Longs continue to outweigh short positions across the most prominent crypto platforms by two to one, which could result in a dangerous long squeeze that causes Bitcoin to reach new lows.

bitcoin longs versus shorts crypto bitmex open interest

Crypto Market Expects Fireworks If BTC Can Hold Above $10,000

On the flip side, if Bitcoin can continue its rally above $10,000, a strong push above the key level could cause FOMO like the crypto market hasn’t seen since the peak of the crypto bubble of 2017.

Back then, Bitcoin broke above $10,000, then not even a month later had reached an all-time high of $20,000.

Related Reading | Bitcoin Futures Expiration, Soaring Open Interest Could Signal Major Move Ahead

Another strong break of $10,000 could cause similar results, which would finally be the powerful “fireworks” type move crypto traders are anticipating that would finally bring Open Interest on BitMEX back to normal levels.

Tags: bitcoinBitMEXcryptoopen interest
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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