Bitcoin has seen a significant surge in open interest (OI), reaching over $2 billion in just three days, leading traders to speculate on a potential “whipsaw” effect on its price.
Noted pseudonymous crypto trader Daan Crypto Trades pointed out the substantial increase in Bitcoin’s OI over the past three days in a recent post on June 5. Open Interest refers to the total number of derivative contracts, such as options or futures, that have not yet been settled, with a rise indicating more traders are speculating on the asset.
Kelly Kellam, director of BitLab Academy, highlighted the sudden spike in Bitcoin’s OI and the ongoing positive funding rates as factors that could lead to a “whipsaw” action on the price of Bitcoin (BTC) – a sudden price spike in the opposite direction of the current trend.
With Bitcoin’s OI rising by $2.02 billion in just three days, reaching $36.92 billion on June 6 according to CoinGlass data, the potential for increased price swings is significant. Traders holding multiple positions may suddenly adjust their strategies, impacting the overall sentiment in the market.
While Bitcoin is currently trading at $70,890, up 4.23% over the past seven days according to CoinMarketCap data, there is a possibility that a sharp retreat to $68,000 could wipe approximately $1.96 billion in long positions. Pseudonymous crypto trader Jelle emphasized the potential for major volatility in the market, despite confidence in Bitcoin entering price discovery soon.
It is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision involves risk, and readers are encouraged to conduct their own research before making any financial decisions.