Bitcoin Breaks $99k, But Analyst Warns Rally Leverage Driven Trending Global News

Bitcoin has recently observed recovery of above $ 99,000, but the trend in open interest can increase concerns about the longevity of the surge.

Bitcoin Open Interest has spike with the latest rally

In a new Post On X, Cryptoctive Community Analyst Martun spoke about this trend in Bitcoin Open Interest with the latest price rally. Here the “Open Interest” refers to an indicator that monitors the total amounts related to BTC that are currently open on all derivative exchanges.

When the value of this metric increases, it means that derivative users are opening new locations. Generally, the total amount of leverage increases in the region because new positions are pop up, so such a trend may lead to high volatility for the price of the asset.

On the other hand, the value of a decline indicator implies that the holders are either closing the positions of their own will or are liquid by their platform. Cryptocurrency can function in a more stable manner after such leverage flushouts.

Now, here is a chart shared by an analyst, which reflects the trend in Bitcoin Open Interest, as well as a 24-hour change in the last week:

The value of the metric appears to have shot up during the past day | Source: @JA_Maartun on X

From the above graph, it appears that Bitcoin Open Interest has seen a rapid growth in the price of the coin with the latest recovery rally. At the peak, a 24-hour percentage change hit a mark of 7.2%, which is quite important.

While it is normal for speculative activity to follow a sharp move in cryptocurrency, its excess can still be a dangerous sign. This is because in a high-foot environment, the possibility of a mass liberation phenomenon may be notable.

In theory, the instability emanating from the chaos of such derivatives market can either take cryptocurrency in the direction, but usually, open interest spikes with rallies serve as an admin. Thus, it is possible that the latest bitcoin rally can also relax unstable.

The trend in open interest is not the only one that suggests that volatility may come for assets, because analytics firm Glasnode indicated in X Post,

The trend in the BTC Realized Volatility over the past few years | Source: Glassnode on X

The chart shared by the analytics firm is for volatility in the feeling of 1-week, an indicator that tracks the percentage change between the highest and lowest points in the bitcoin value recorded during the last seven days.

As displayed in the graph, the value of the metric has recently submerged, which means the property is trading within a very narrow border. “In the last four years, it has reduced only in a short time – for example, October 2024 (22.88%) and November 2023 (21.35%),” Glasnod explains. “Similar contraction in the past led the major market moves.”

BTC Price

After a jump of about 2% in the last 24 hours, Bitcoin has returned above the level of $ 99,300.

Looks like the price of the coin has been marching up in recent days | Source: BTCUSDT on TradingView

Dall-e, Glassnode.com, Cryptoquant.com specially displayed image, chart from TradingView.com