This is an editorial by Mike Ermolaev, Head of Communications at ChangeNOW Exchange.
As a retail trader or someone just getting started with bitcoin a while ago, you might be looking for clues as to what to expect next at that price. For comparison, a second opinion is also important.
Bitcoin Futures Open Interest Analysis
Bitcoin open interest provides insight into the amount of money entering and exiting the Bitcoin derivatives market. Derivatives such as Bitcoin futures and perpetual swaps are used by traders to speculate whether the price of Bitcoin will rise or fall without owning the digital asset. A higher bitcoin open interest means more traders have opened positions, a lower one means more traders have closed positions.
At the time of writing, open interest in Bitcoin has increased from 350,000 BTC in early April 2022 to 592,000 BTC.
Converted to USD, the current open interest of $13.67 billion is relatively low, matching the sharp lows of January 2021 and June 2021.
Whenever there is a significant increase in open interest on a BTC basis as opposed to a USD basis, it indicates that the market is gaining more BTC exposure, but we still don’t expect it to move much.
Perpetual swap funding rate rises
To understand how most traders are positioned in the market, we can look at the funding rates used in perpetual swap contracts. It is a derivative financial contract specific to Bitcoin and cryptocurrencies that has no expiration date or settlement. Traders can use up to 100x leverage when betting on Bitcoin price. A funding rate is a periodic payment made to or by a long or short trader based on the difference between the perpetual contract price and the spot price.
A positive funding rate generally indicates that the trader is taking a long position and is generally bullish on rising prices. On the other hand, a negative funding rate indicates that the trader is bearish, usually taking his position short and believing the price will fall. Funding rates above he 0.005% indicate an increase in the speculative premium, a trend that is currently occurring.
Bitcoin price rises above 50-day simple moving average
Analysts like me who use technical analysis charts and patterns to make investment decisions believe that Bitcoin is currently trading above its 50-day Simple Moving Average (SMA), an effective trend indicator. I’m paying attention to This is his first time since mid-July. This confirms that the underlying momentum may be building.
Long-term holders see Bitcoin as an attractive risk/reward investment
Below is another chart that visualizes how long-term bitcoin holders feel about the price of bitcoin. Long-term Bitcoin holders are generally good at identifying the best times to buy and sell Bitcoin. This should come as no surprise. Because they have more experience than newcomers just starting out. It is important to be aware of when the number one cryptocurrency believes it will rise in price in the future.
The reserve risk chart is now in the green zone. This means Bitcoin is an attractive risk/reward investment, meaning a high level of trust combined with low prices. Investors investing during green reserve risk have historically enjoyed high returns.
The market perception of various knowledgeable market participants, who have traditionally made wise investment decisions, has led them to become increasingly confident about the future of the Bitcoin price and willing to take more price risk. is shown. There is a cautious upward bias in the Bitcoin derivatives market, and long-term investors seem pretty confident.The price of Bitcoin is also showing signs of improvement based on technical indicators.
Disclaimer: This is not financial advice. All opinions, statements, estimates and projections expressed in this article are solely those of Mike Ermolaev, his Head of PR at ChangeNOW.
This is a guest post by Mike Ermolaev. Opinions expressed are entirely his own and do not necessarily reflect those of his BTC Inc. or Bitcoin Magazine.