Bitcoin Open Interest Surges Amid Increased Market Volatility

Bitcoin's open interest (OI) weighted funding rate has climbed to its highest point in recent months, suggesting a potential short- to medium-term uptrend, according to market experts.

Currently, the OI weighted funding rate is at 0.012%, a level not seen since July 27, when Bitcoin briefly touched $68,000. However, the market later saw a steep 22% drop in early August due to a significant impact on leveraged positions.

While a positive funding rate often indicates bullish sentiment, YouHodler’s Chief Markets Officer, Ruslan Lienkha, advises caution. He noted, “An increase in the funding rate may hint at a short- to medium-term uptrend, but given the crypto market’s volatility, it’s not a reliable indicator for long-term trends.”

Lienkha emphasized that unlike traditional markets, such as commodities, where funding rates tend to align with long-term economic trends, the crypto market’s rapid changes in sentiment make its funding rates more volatile and less dependable for long-term forecasting. He explained, “Crypto doesn’t have a direct link to real-world economic processes, which means market sentiment can shift much more quickly.”

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How Do Bitcoin’s Gains Compare to S&P500?

The rise in Bitcoin’s funding rate coincides with heightened market volatility and substantial liquidations. Data from Coinglass reveals that over $93 million worth of Bitcoin positions were liquidated in the last 24 hours, with $83 million coming from short positions.

The broader crypto market also saw more than $240 million in liquidations during this period. Ethereum, the second-largest cryptocurrency, accounted for $50 million of these liquidations, with $43 million from short positions.

Kosta Gushterov