A “magic number” to anticipate a big drop in the price of Bitcoin (BTC): if it were that simple, trading would be less exciting – goodbye adrenaline. The likelihood of a fall in the price of BTC would increase as the amount of open interest on derivatives approaches 10 digits.
Bitcoin hates the billion dollars
Historical data points to a fall in the price of Bitcoin, a few days after the interest opened on the futures BTC has reached $ 1 billion.
The exchange BitMEX has been for several years the leader in futures contracts BTC, with an estimated market share of 50% until July 2019.
Traders have been following the trade metrics, core metrics, finance rate, open interest with interest.
August 2, 2020, Bitcoin records a drop of $ 1,400 as derivatives BTC of $ 1 billion are liquidated for insufficient margin.
Traders are then worried when open interest approaches $ 1 billion.
These 4 exchanges to watch
Since 2020, many exchanges have entered the futures sector BTC, among others OKEx, Binance and Bybit. OKEx managed to take the place of BitMEX as a market leader.
November 20, 2020 a few days before the market crash Bitcoin at 16,334 USD, open interest on derivatives on 4 exchanges had crossed the billion dollar mark.
The total amount of open interest reached $ 7.4 billion, as did the average daily volume on spot exchanges.
Volumes on a single exchange should not have a big impact on the markets.
But Binance, the CME, OKEx and Bybit now holds more than half of open interest, an indicator to watch closely.
Bitcoin is once again a few hundred dollars from $ 20,000. The BTC benefits from the support of institutions. Do BTC Derivatives Markets Increase Crash Risks? Should these markets that attract institutional investors be closed to better secure BTC investments? Can we take the risk of doing without the support of these whales? A 6-digit Bitcoin at all costs, and too bad for big falls? The bulls will get over it anyway.
Litecoin, welcome in the Silver Age