Bitcoin Open Interest Jumps $2B in a Day: Is the Rally Sustainable?

Bitcoin open interest has seen a substantial increase following the Federal Reserve’s May 7 FOMC meeting when BTC briefly touched $96,000. According to the data, aggregated open interest jumped as Bitcoin’s price climbed toward the $100,000 level.

Bitcoin open interest adds $2B

Bitcoin open interest has jumped by $2 billion in a single day following BTC’s movement around the $96,000 level during the May 7 FOMC meeting. According to the chart data, aggregated open interest rose from approximately $17.5 billion to $19.15 billion. This is an 11.63% increase in just 24 hours.

The timing of this open interest surge coincides directly with Bitcoin’s price action on May 7-8. This was when the cryptocurrency began a strong upward move from the $95,000 range toward $100,000. The chart clearly shows that open interest began climbing on May 7, with the steepest increase occurring over a 16-hour period.

This $2 billion influx of new positions is nothing but fresh capital entering the Bitcoin futures market. This may mean that the traders are more confident these days following a decision by the Federal Reserve to keep interest rates constant. The volume indicator of the price chart shows that higher trading occurred in this time period. This further confirms that more individuals are getting into the market.

Bitcoin open interest is the aggregate value of open futures contracts. Abrupt spikes usually indicate shifts in market sentiment and potential price movements. The current value of $19.15 billion in BTC open interest indicates that traders are placing massive bets on price action in the near future.

Bitcoin wallets return to a state of profit

The recent Bitcoin price rally has improved the profitability profile of market participants according to Glassnode data. When BTC dipped to the local low of $74,000, more than 5 million Bitcoin were held in underwater positions. However, the subsequent recovery has reduced this number to approximately 1.9 million BTC. This shows that over 3 million Bitcoin have returned to a profitable state.

This transition from loss to profit for many holders generally strengthens market sentiment, as investors experience financial relief. This comes amidst the surge in Bitcoin open interest. The data shows that a considerable number of short-term holder coins have returned to profitability as Bitcoin pushed above $95,000. This change is likely to drive profit-taking events as the market continues to show strength, as per Glassnode.

With Bitcoin’s price reaching as high as $99,800, the market has attracted fresh capital inflows. The realized cap, which measures the value of all Bitcoin at the price at which they last moved, has climbed to an all-time high of $889 billion. This metric confirms that new money is entering the Bitcoin ecosystem and supports the current price levels.