Bitcoin’s open interest has been rising in recent weeks as its price has continued to rise. This continued rise in open interest reflects the increased interest in the cryptocurrency since the U.S. Securities and Exchange Commission (SEC) approved Spot Bitcoin ETFs for trading. BTC open interest has now risen to historic levels, reaching an all-time high in 2021.
Bitcoin Open Interest at 2021 Levels
According to facts from Coinglass, Bitcoin open interest has risen to over $24 billion. This growth represents an approximately 50% jump in open interest since the beginning of the year 2024. But more importantly, open interest has risen to levels not seen since 2021.
Looking at the open interest chart, the last time Bitcoin OI was this high was in November 2021, when the cryptocurrency reached its all-time high price of $69,000. This increase in OI was consistent across all crypto exchanges, with CME, Binance, and ByBit leading the charge and controlling over 50% of open interest.
Source: Coinglass
The continued rise has also been accompanied by a rise in greed among crypto investors. Currently, the Crypto Fear & Greed Index is firmly in Greed, indicating that crypto investors are in a place where they are willing to take more risks than usual.
Implications for the BTC price
Now that Bitcoin’s open interest is so high, it could have a negative impact on the BTC price. This is because past performance where open interest has risen so quickly has often ended in a market crash. The same was the case in 2021, when the Bitcoin OI set its previous record.
In 2021, when the BTC price exceeded $69,000 and open interest exceeded $22 billion, the euphoria was incredibly high as it is today. However, this would be short-lived as a market crash would occur shortly afterwards. The BTC price would eventually rise from $69,000 to $46,000 in December, falling almost 40% in a month.
If the same trend were to repeat in the current trend, a massive crash could be on the cards for Bitcoin. A similar decline would see Bitcoin fall back to $41,000, wiping out gains made in recent weeks.
However, there are several factors at play in the current market, such as Spot Bitcoin ETF issuers seeing huge interest in their exchange-traded products. Just last week, inflows into Spot BTC ETFs reached a new record high of $2.2 billion. So if these large institutions continue to buy BTC to meet the demand of their customers, the BTC price could continue to rise.
BTC bulls push price above $52,300 | Source: BTCUSD on Tradingview.com
Featured image of Barron’s, chart from Tradingview.com
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