Bitcoin is currently facing downward pressure, trading 1.17% lower at $37,300 levels, accompanied by a market cap of $729 billion. The potential for more Bitcoin liquidations increases as the BTC price falls below $37,500, leading to a notable surge in Open Interest (OI).
Popular crypto trader CrediBULL crypto points out a significant rise in the Open Interest (OI) for Bitcoin derivatives. This indicates that many leveraged traders positioned themselves for this price drop instead of being cleared out of the market (washed out). This is less than ideal because it suggests that leveraged positions are still prevalent, leading to increased market risk.
The analyst added that the mention of OI being back in the “danger zone” suggests that the market is in a precarious state with high leverage, signaling the potential for more volatility. He points out that this increased volatility doesn’t necessarily provide a clear direction for the market.
The two possible scenarios mentioned are a “major short squeeze” (a rapid increase in price due to short sellers covering their positions) or a “continued flush back down” (a sustained decline in price).
If there’s a short squeeze leading to a price rebound above a certain level (37.6k), it might be safe to enter a position. On the other hand, if there’s a long squeeze and the price continues to decrease, there could be an opportunity to buy at a lower price.
Crypto analyst illustrates two possible scenarios on a standard chart, here’s the current analysis:
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