- Bitcoin open interest plunged following Bitcoin’s trip back below $10,000.
- Open interest and put/call ratio near one-year lows.
After holding the $10,000 for a brief period earlier this week, Bitcoin fell back reversing its gains. As a result, open interest in the popular digital asset plunged rapidly.
Open interest is calculated by the outstanding contracts at the conclusion of the trading day. Open interest helps quantify market interest in the asset.
For example, if a trader opens 10 Bitcoin futures contracts for $5000,000, open interest will rise to $500,000. However, if the trader closes the position, the open interest will decline back to $0. Therefore, open interest can help quantify outstanding market interest.
Bitcoin’s plunge back below $10,000 resulted in open interest falling as traders quickly closed positions amid the rising volatility.
Open Interest and Put/Call Ratio Near One Year Lows
The rapid decline in open interest and the Bitcoin put/call ratio has led to both indicators trending down near one-year lows.
However, there is still a silver lining. Since open interest and the put/call ratios are near one-year lows, that means that for the majority of the year, open interest and the put/call ratio have been in the positive. Furthermore, mainstream exchanges have recently been reaching new open interest highs. Thus, open interest and the put/call ratio may still be relatively bullish despite Bitcoin’s rejection of the $10,000 level.
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