Data shows a divergence emerging between Bitcoin and Ethereum’s open interest, something that has been bullish for BTC in the past.
Bitcoin’s open interest has declined while Ethereum has risen
This is evident from data from the on-chain analysis company SantimentBTC open interest has fallen since Monday. The ‘open interest’ here refers to the total number of Bitcoin contracts (in USD) currently open in the futures and options market.
When the value of this measure increases, it means that more positions are currently being opened on derivatives exchanges. Such a trend could lead to greater asset volatility, as more positions generally mean higher overall leverage for the sector.
On the other hand, falling values indicate that traders are closing their positions or being liquidated. The cryptocurrency may become calmer due to these types of trends.
Here is a chart showing the trend in open interest for Bitcoin and Ethereum over the past month:
Looks like the two metrics have been going opposite ways in recent days | Source: Santiment on X
As shown in the chart above, Bitcoin open interest has been on a downward trend in recent days. This decline in the indicator had first started when the fake iShares ETF announcement led to over $100 million shorts being sold overnight.
Not long after this sudden sharp liquidation squeeze occurred, the measure saw a slight rebound but quickly returned to a downward trajectory.
At the same time that this latest decline in Bitcoin’s open interest has occurred, Ethereum’s open interest has instead recorded a rise. This suggests that as contracts for BTC futures and options close, the ETH side of the market is seeing renewed interest.
Interestingly, as Santiment highlighted in the chart, the last time this trend occurred, Bitcoin price benefited from a surge. This pattern previously took place between September 28 and 30, and shortly after, the BTC price rose by approximately 4.5%.
The difference between the metrics of the two assets was much greater then than it is today; however, the magnitude of both the decline in BTC open interest and the increase in ETH open interest was much larger.
Nevertheless, the same general pattern has still repeated itself this time, so it now remains to be seen whether Bitcoin would see a bullish effect this time as well, and if so, to what extent, given the smaller size of the divergence.
BTC price
Bitcoin has become obsolete in recent days as its price is still currently trading around $28,400.
The value of the coin has been consolidating sideways in the past few days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, Santiment.net
