Bitcoin’s price spiked above $20,000 earlier today, and even though it’s currently trading below this level, the cryptocurrency charts gains of 1.4% over the past 24 hours. Now, on-chain analysts warn of enhanced incoming volatility.
- The cryptocurrency market added some $50 billion in the past day as Bitcoin’s price is testing the critical level of $20K, which also contains the highs from the cycle in 2017-2018.
- At the time of this writing, the price is trading slightly below that point but is still up around 1.4% on the day.
- Now, analysts are warning that volatility is likely to increase as the open interest builds up and futures traders are stepping in.
- According to a CryptoQuant analyst, the open interest on the most recent pump increased by a whopping $615 million in just a few hours.
- Generally, to analyze probabilities of which direction the price might end up going, the open interest in conjunction with the funding rates is a good indicator.
- This time, however, it appears that funding rates are almost neutral.
This means that long and short traders are almost in balance. Leverage added to both sides (long and short) and will increase volatility in the near term.
- Speaking of leverage, it’s also worth noting that the past 24 hours saw around $180 million worth of liquidated positions, 75% of which were shorts.
- Data from Coinglass hints that the open long positions for the past 24 hours are 51%.