Bitcoin Price Declines to $53,000 While Open Interest in Futures Reaches a Two-Year High.

Prior to an unexpected sell-off to $50,000 on several platforms, the price of Bitcoin surged to a new 2024 high of $53,019 on February 20. The impending supply halving event and steady spot BTC ETF inflows are being cited by traders as the main causes of the price movement. As of this writing, BTC is trading above $52,100.

Let’s examine the main causes of the current volatility in the price of Bitcoin.

Open Interest in Bitcoin Futures Reached a 26-Month High.

The open interest (OI) in bitcoin futures has reached levels not seen before 2021, marking a new yearly high. This suggests that trade activity surrounding the coin with the biggest market capitalization has increased.

The total open interest (OI) for bitcoin futures reached $22.69 billion on February 20, the highest since Nov. 11, 2021, and very near to the top of $23 billion achieved then, according to data from the cryptocurrency futures trading and information platform Coinglass.

In 2023, the open interest in Bitcoin futures surged by over 30%, matching the cryptocurrency’s 23% year-to-date rise to $53,000, levels last seen in December 2021.

An increasing value of open interest, which is a gauge of the total value of all outstanding or “unsettled” Bitcoin futures contracts across exchanges, denotes heightened trader sentiment and market activity surrounding the original cryptocurrency.

Inflows into Spot Bitcoin ETFs rise

Even as withdrawals from gold ETFs increase, increased inflows into spot BTC ETFs seem to be the driving force behind investors’ ongoing bullish mood. Since the U.S. Securities and Exchange Commission approved spot Bitcoin ETFs on January 10, the price of Bitcoin has risen above its peak of $49,000.

In the six weeks after trading started on January 11, $4.91 billion has been invested in Bitcoin exchange-traded funds (ETFs), according to data from Farside Investors.

Financial analyst Tedtalks Macro noted on February 17 that, after halving, “we only need ~$25M of net inflows to spot ETFs per day, to offset the miner production.” The constant increase in net inflow to spot Bitcoin ETFs, at an average of $182 million per day, was emphasized.

The impending Bitcoin halving, which is anticipated to result in a 50% reduction in mining profits, is also anticipated to significantly increase investor interest in BTC. Historically, the halving event has come before of Bitcoin’s entry into a parabolic rally many months later.

Bitcoin traders concentrate on the upcoming surge

According to IntoTheBlock data, Bitcoin traders were concentrating on the upcoming surge. According to the In/Out of the Money Around Price (IOMAP) model, a significant portion of Bitcoins were previously purchased for an average of $52,081. As the investors break even, some of these might be liquidated, indicating strong opposition in this space.

It is evident that traders are committed to seeing the price stay above $52,000. The buyers are now preparing for a fresh fight to hold the $52,000–$51,700 support zone, and a close above or below this zone “will determine the direction of $ BTC’s next move,” according to independent analyst Ali.


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