Bitcoin (BTC) experienced a surge in price, reaching a new high for 2024 at $53,019 on Feb. 20. However, it quickly dropped to $50,000 on certain exchanges. Traders attribute the price movement to consistent inflows into spot BTC ETFs and the upcoming supply halving event. Currently, BTC is trading above $52,100.
One of the main reasons for the volatility in the Bitcoin price is the increase in open interest for Bitcoin futures. The open interest has reached a new yearly high, reaching levels not seen since November 2021. Data from Coinglass, a cryptocurrency futures trading platform, shows that the total open interest for BTC futures reached $22.69 billion on Feb. 20, close to the peak of $23 billion recorded in November 2021. This increase in open interest aligns with Bitcoin’s rally of 23% in 2023, bringing its price to $53,000.
Open interest is a measure of the total value of all outstanding Bitcoin futures contracts across exchanges. An increase in open interest indicates higher market activity and trader sentiment surrounding Bitcoin.
Another factor contributing to the bullish sentiment for Bitcoin is the increasing inflows into spot BTC ETFs. Despite outflows from gold ETFs, investors continue to pour money into spot BTC ETFs. Since the approval of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission on Jan. 10, $4.91 billion has been invested in Bitcoin ETFs within six weeks. The total weekly inflows into spot Bitcoin ETFs reached $2.5 billion last week.
The upcoming Bitcoin halving event is also expected to fuel investors’ interest in BTC. The halving event will reduce the rewards given to miners by 50%. Historically, this event has preceded a parabolic uptrend in Bitcoin’s price in the months following the event.
Bitcoin traders are now focused on the next leg of the current rally. The In/Out of the Money Around Price (IOMAP) model shows that a significant number of BTCs were acquired at an average cost of $52,081. Some of these BTCs may be sold as investors break even, creating resistance around this price level.
Traders are determined to see the price of Bitcoin hold above $52,000. The buyers are preparing to defend the support zone between $52,000 and $51,700, and whether the price closes above or below this area will determine the direction of Bitcoin’s next move. It is important for readers to conduct their own research and make informed decisions regarding investments and trading moves.