Journalist
Posted:
- Bitcoin exchange inflows increased while open interest decreased.
- The realized price of $37,134 acted as support for BTC.
A few days back, Bitcoin [BTC] witnessed a spike in Open Interest, indicating an increase in investor confidence. But after gaining the lion’s share of Open Interest, the Bitcoin metric is back in a downtrend, as Axel Adler Jr. noted.
Open Interest is generally a measure of the total liquidity allocated to futures and options contracts in the market. In regards to price action, rising Open Interest can serve as a force for a coin’s value. Conversely, a falling Open Interest may indicate weakness in price development.
Falling interest rates, strengthening value
AMBCrypto, in a report dated November 11, explained why Open Interest on stock exchanges has decreased. In this report we mentioned how institutional money seems to flow more into contracts than into retail.
Another reason mentioned in another report was the growing value of altcoins, and the decision of traders to profit from these price movements. Despite the waning interest, AMBCrypto confirmed Adler’s view that the price of BTC did not plummet.
When Open Interest decreases it is a sign that traders are closing their positions and typically the price of BTC decreases, but right now that is not happening!
We see strong demand, which leads to a price increase. pic.twitter.com/Efo0Hadiq6
— Axel
Adler Jr (@AxelAdlerJr) November 12, 2023
Normally, the usual expectation was for Bitcoin to fall below the $37,000 threshold. But at the time of writing, the value of one Bitcoin was $37,147.
While this circumstance may be unusual, a rigorous investigation by AMBCrypto has provided some insights into why BTC has maintained this stance. One of the statistics that support this is the Realized price.
The Realized Price is the average price that market participants pay to purchase a coin. Depending on the market direction, this price can act as support or resistance for Bitcoin’s true value.
According to CryptoQuant data, the Bitcoin Realized Price at the time of writing was $37,134. Our analysis shows that this value acts as support for BTC, preventing the coin from losing its hold at $37,000.
Source: CryptoQuant
BTC starts again
That Bitcoin defied market expectations was also found in another analysis published on CryptoQuant. This time it was not Adler who led the insight, but the pseudonymous author CryptoOnChain.
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According to CryptoOnChain, there has been a sharp increase in Bitcoin Exchange inflows. Also, some of the 55,000 BTCs sent in exchange were transferred by addresses holding between 1 BTC and 1000 BTC.
Source: CryptoQuant
Furthermore, this increase in currency inflows should trigger a decline in prices. But like Adler, CryptoOnChain noted that:
“The last time such a high turnover occurred was on October 24th. Although this amount of bitcoin has apparently ended up on the exchanges, this issue is contrary to the current market trend.”