FX.co ★ Bitcoin futures open interest is encouraging

Bitcoin has not yet managed to hold the 48,178.13 level, although yesterday's daily candle closed with a slight increase above this horizontal. But today's breakdown is likely to be true. Although, until the candlestick is closed, little hope remains.

Well, even if the price of the main cryptocurrency returns to the 44,807.24 - 48,178.13 corridor, this may well turn out to be a step back before continuing to grow.

At the very least, open interest in bitcoin futures has rebounded to May levels, which is encouraging for a massive bullish breakout above $50,000.

The total outstanding futures contracts on Deribit reached $1.37 billion on Monday. This is the highest level since May 27. In parallel, according to data from Stack Funds, the difference between the spot rate of bitcoin and the price of its futures contract has widened, returning to June levels.

This management company sees the recovery in open interest as a sign that investors are re-entering the bitcoin market, but are taking a "riskier approach." In addition, according to research director Lennard Neo, "contango trading" in bitcoin futures reflects a bias towards bullish interests.

"More importantly, we are seeing a stable trend in demand versus supply, which allows us to believe that the markets will receive good support, at least in the near future, with further consolidation before surpassing the $50,000 mark."

Once again, we hear confirmation that the current consolidation is not so bad. At least from a technical point of view, the scenario of growth to the historical maximum will not lose its relevance until the price of BTC/USD falls below the level of 41,980.24.

Let's go back to bitcoin futures. In June, their price collapsed under the weight of a sell-off in the spot market. The catalysts for the fall were the Chinese repression against miners. Leveraged futures traders closed their long positions due to margin requirements, and many were kicked out of the market through automatic liquidation mechanisms on exchanges. This narrowed the gap between bitcoin futures prices and spot prices, raising concerns about a negative futures contract premium (backwardation).

At the time, Deribit had a three-month (annualized) base of about 2.5%. But in ideal "contango" conditions, futures should trade at a premium of 5-15% on an annualized basis, in line with the stablecoin lending rate.

But by August, the miner situation had stabilized, and Glassnode reports began to show that miners began to re-accumulate tokens. This partially explains why, after dropping to $29,000, bitcoin surged to $50,000. In parallel, there is a surge in open interest in futures, which shows a renewed buying interest in BTC among both investors and traders.

What to do with this fact amid conflicting opinions about whether bitcoin has a chance to grow? The trader, however, as always, trade what he sees, not what he knows. And here technical analysis will help us. And if (most likely) bitcoin finally returns under the level of 48,178.13, it is worth looking at its possible reversal upward from the horizontal at 44,807.24.