The price of Bitcoin didn’t reach $20,000, but the record open interest in BTC futures shows that professionals are still bullish.
The Bitcoin price (BTC) didn’t manage to exceed the USD 20,000 level this week, but several records related to volume and open interest were set on the way to USD 19,484. One notable achievement was that open interest on aggregate futures contracts reached $7.4 billion on the derivatives exchanges.
Analysts warn that a correction in the BTC price is possible
As we can see above, there has been a 110% increase in the last 6 months, and it is also worth noting that the Chicago Mercantile Exchange (CME) currently has over $1.1 billion in these contracts. These data are irrefutable proof of the growing institutional participation in the BTC markets.
Volume has shot up to new highs, will the price of BTC continue?
The total volume of the crypto-currency market also reached a historic high on November 24th. Some investors may infer that this is a bullish event, but it is important to remember that there is a buyer and a seller in every trade. Therefore, how can the entry of big sellers be considered bullish?
Total daily volume of crypto currencies (in USD). Source: TradingView
The total volume of each spot exchange reached USD 285 billion this week, but there is always the possibility that some of these exchanges have inflated their volumes. Despite this, USD 285 billion represents an increase of 11% compared to the peak seen on March 13.
Bitcoin’s price must recover this level to resume its bullish run and reach USD 20,000
Yesterday, the Bitcoin options markets also set a high in terms of open interest. These are contracts that a buyer pays up front to either buy (call options) or sell (put options) at a predetermined price in the future.
Note how the current open interest of $5 billion on BTC options represents a 316% increase from the $1.2 billion level just six months ago. Although this includes both call and put options, this impressive increase in liquidity is a positive thing.
The open interest of options deserves special attention
High open interest tends to draw the attention of new arbitrage desks and open the doors to larger institutional clients. Still, to better assess how professional traders are pricing to continue the current upward run, we must look at the 25% delta slope of options.
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A 25% inclined delta indicates that put options cost more than similar call options, indicating a bearish sentiment. On the other hand, a delta tilted to the negative side suggests bullishness.
The above graph shows that the figure of November 24, of -27.5%, practically coincides with its historical minimum. Undoubtedly, this is an extremely bullish condition and the data indicates that option traders are not willing to sell upward protection.
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Therefore, although the USD 20,000 level has not yet been exceeded, there is sufficient reason to celebrate that the market is healthy and without signs of excessive leverage or decreased investor interest.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.