Bitcoin (BTC) price crossed $48,000 on Feb. 9, but weekend activities from derivatives traders suggest that more action will follow in the coming days.
The total capital stock in the BTC futures markets has crossed the recent peak recorded during the spot ETF approval euphoria on Jan. 11, sparking optimism that BTC price could soon follow suit.
Bitcoin open interest approaches $22 billion first time since April 2021
The spot ETF approval on Jan. 11 has increased public interest in BTC as a legitimate asset class, leading to a flurry of institutions allocating a significant chunk of their portfolio to acquiring BTC in recent weeks.
However, vital market trends show bitcoin derivatives markets have witnessed a more significant influx of capital. Coinglass’ open interest metric tracks real-time changes in total capital stock invested in BTC perpetual futures markets.
BTC open interest (OI) hit a milestone on Feb. 12, crossing the $21.8 billion mark, its highest since March 2022.
A closer look at the charts shows that BTC OI has already increased by $4.5 billion (25%) so far February 2024.
Interestingly, this 25% jump in OI between Feb. 1 and Feb. 12 has now outpaced the BTC spot price which has only grown 15% from $41,860 to a peak of $48,820 during that period.
Typically, such a rapid growth in OI is a prime signal that the market is welcoming new participants injecting fresh capital inflows. But when the OI growth outpaces spot prices, it can be a bullish signal for a number of reasons.
Firstly, it indicates a sense of urgency among traders who are looking to quickly capitalize on the current dominant bullish sentiment in the market.
Secondly, the robust interest from traders and investors signals confidence in the BTC’s fundamental drivers with respect to the prevailing macro economic conditions.
BTC price forecast: bullish $50,000 target still in play
At the time of writing on Feb. 12, BTC is currently trading at $47,800. The last time BTC open interest reached its current $22 billion mark, spot prices were well above the $50,000 range.
Hence, with BTC price currently undervalued relative to the capital inflows into the derivatives markets, a bullish attempt at reclaiming the $50,000 target could be in play in the coming days.
However, as observed in recent weeks, BTC bulls face significant resistance at the $48,900 territory.
IntoTheBlock’s global in/out of the money data shows that 3.3 million addresses had acquired 1.2 million BTC at the minimum price of $48,915. Considering that they’ve been holding at a loss for nearly 3 years, a large number of those investors could exit once prices approach their break even point.
If the bulls can scale that sell-wall, a retest of the $50,000 territory could be on the cards as predicted.
On the flipside, the bears could regain foothold if they can force a major downswing below $40,000. But that seems far-fetched considering the looming support buy-wall at $42,000.
At that zone, 6.7 million addresses that acquired 3.01 million BTC at the average price of $42,047, could make frantic covering purchases to avoid slipping into a net-loss position.