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Open interest, a measure of the total number of outstanding derivative contracts that have not settled, rose to a 19-month high of around $17.04 billion. This increase, which represents an increase of 7.89% over the last 24 hours, recalls the situation that prevailed before the LUNA crash in March 2022.
The majority of current open interest is focused on major exchanges such as CME, Binance, and Bybit. This significant increase in open interest could be an indicator of where the price of bitcoin could be heading. Historical patterns suggest that an increase in open interest can lead to an increase in the price of bitcoin. In March 2022, for example, a similar increase in open interest was followed by a surge in the price of bitcoin, which rose from $38,700 to over $47,000 in the span of a month.
Today, the price of bitcoin is $37,500. If the current trend aligns with the historical precedent set in March 2022, market observers anticipate the possibility of bitcoin’s price rising as high as $45,000 by the end of the month.
Nonetheless, caution is advised due to past trends where a spike in open interest led to a subsequent decline in bitcoin’s value. In April 2022, after reaching a high level of open interest, the market experienced a decline with the price of bitcoin falling to $27,000.
Investors and analysts are closely monitoring these developments, as they could mark the next significant move in bitcoin’s price, in one direction or the other. With memories of past volatility still fresh, market participants are weighing the potential for growth against the risk of further decline.
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