Bitcoin’s open interest on derivatives exchanges saw a sudden surge of $1 billion on September 18, leading some to speculate that whales were accumulating in anticipation of the unsealing of Binance’s court filings. However, a closer look at derivatives metrics suggests a more nuanced picture.
The surge in open interest coincided with a 3.4% increase in Bitcoin’s price to $27,430. However, the surge was short-lived, and by the end of the day, Bitcoin’s open interest had dropped back to $11.3 billion as its price declined by 2.4% to $26,770.
The surge in open interest was likely driven by bullish sentiment, but attributing it solely to Binance’s court rulings is unwarranted. The Bitcoin futures contract funding rate, which gauges imbalances between long and short positions, remained stable during this period.
Analyzing the Sudden Surge in Bitcoin Open Interest: More Than Just Whale Accumulation?
One possible explanation for the surge in open interest is the involvement of market makers executing buy orders on behalf of substantial clients. This would account for the initial enthusiasm in both the spot market and BTC futures, propelling the price higher. However, after the initial surge, the market maker becomes fully hedged, leading to a price correction.
In summary, while the exact cause of the open interest surge remains unclear, it’s important to analyze trading patterns and consider the involvement of market makers before jumping to conclusions about Bitcoin price movements.
This article is for informational purposes only and should not be considered as investment advice. It does not reflect the views of the author or Cointelegraph.