The Bitcoin (BTC) market finds itself at a pivotal juncture following a notable conference in 2024, where analysts report that the open interest in BTC futures has surged beyond previous levels.

According to independent analyst Horse, this represents a “breakout” from an established range, particularly concerning Bitcoin’s futures open interest.

Open interest (OI) is defined as the total number of outstanding derivative contracts for BTC across all trading platforms. An uptick in this figure usually points to an influx of new positions being established in the derivatives market, which can subsequently heighten market volatility.

Horse shared insights via a chart demonstrating that Bitcoin’s open interest on Coinbase Pro has surpassed a threshold that had constrained it since March, a period when BTC reached record-high prices.

BTC/USD chart versus OI on Coinbase Pro. Source: Horse

The increase in Bitcoin’s open interest has paralleled a rise in price, heavily influenced by a shift in political narratives in the U.S. that favor cryptocurrency.

Horse referenced remarks from former U.S. President Donald Trump at the Bitcoin 2024 Conference in Nashville on July 27, noting that the market’s conditions had been favorably set for a bullish outlook.

“While it remains uncertain if these conditions will be fully realized, there is an increased expectation to maintain a long-term bullish perspective on this asset class,” commented Horse.

Following Trump’s address, Bitcoin’s price saw an uptick, leading to the closing of long positions in both perpetual and options markets. Horse described this situation as “very bullish.”

“Entering fresh long positions here may not be ideal based on risk-to-reward, as the scenario tends to favor shorts or hedges. The invalidation point is notably close, roughly at 69+.”

Another analyst, Skew, echoed similar observations, stating that the overall sentiment in the Bitcoin perpetual futures market was “net long.”

Skew further explained that continued buying in the spot market would be essential for Bitcoin’s price to break past the $72,000 mark to mitigate the risks associated with existing long positions.

“It is clear that a halt in spot buying could trigger a sudden liquidation of long positions, resulting in quick downward shifts as market liquidity is tested. The market is indeed at an inflection point.”

As anticipated by Skew, Bitcoin’s price decreased from the $70,000 range to approximately $67,271, based on data from market sources. This decline has led to the liquidation of over $55.66 million worth of long BTC positions within the last 24 hours, with $46.74 million liquidated in just the last four hours.

Total BTC liquidations across all exchanges. Source: Coinglass

Notably, with Bitcoin futures open interest soaring above $39.4 billion, the price of BTC may be poised for a breakout to new all-time highs, signifying that the ongoing price correction could be brief.

This content is for informational purposes only and does not serve as investment advice. Readers are encouraged to perform their due diligence when making investment decisions.