As Bitcoin ($BTC) price remained trapped in a consolidation over the past two months, it has seen its Open Interest (OI) – the total unsettled futures in the derivatives market – surge to a local high.
Bitcoin’s OI 30D change, which shows the net buildup of new positions over the past 30 days, has climbed to about 750,000 $BTC, valued at around $47.92 billion at press time, according to data from CryptoQuant, analyzed by Finbold on July 29.
The $BTC OI 30D change has gradually climbed over the past two months, signaling a renewed wave of leveraged speculative trading. Binance cryptocurrency exchange recorded the highest growth in Bitcoin OI 30-day of approximately 336,550 coins, valued at over $21.53 billion at the time of reporting.
Gate.io registered roughly 319,880 $BTC in fresh capital to its derivatives segment. Meanwhile, Bybit crypto exchange has seen an increase of 137,860 Bitcoin, worth more than $8.8 billion at the time of publication.
As such, Bitcoin price is prone to higher volatility due to the impact of more potential liquidations, as per Arab Chain.
“With Bitcoin trading near $63,000, a continuation of this trend could increase the likelihood of heightened volatility and large-scale liquidations, particularly if Bitcoin experiences a sharp price move in either direction,” Arab Chain noted.
Bitcoin price outlook amid elevated OI
As Bitcoin’s OI surged to a two-month high, $BTC’s OI-Weighted Funding Rate – a fee set by crypto exchanges to maintain balance between perpetual contract price and the value of the underlying asset – has remained predominantly positive, based on metrics from CoinGlass. Historically, a positive Funding Rate has been associated with bullish sentiment and vice versa.
With Bitcoin price having been trapped in a consolidation between $66,300 and $58,550 over the last two months, any solid breakout from this level could result in a strong move.
As such, the continued buildup of Bitcoin OI, amid predominantly positive Funding Rates, could signal an imminent volatility spike.