For the past few weeks, Bitcoin’s open interest has been on a downtrend, pushing it to a one-year low. But with the Grayscale win against the SEC coming on Tuesday, August 29, and a positive wave sweeping across the region, open interest in the digital asset has started to rise again.
Bitcoin Open Interest is driving a rapid turnaround
On-chain data tracking platform Kaiko reported on Tuesday, August 29 that Bitcoin’s open interest had been declining for some time. In the chart shared by the tracker, it is clear that this BTC metric had previously fallen significantly since 2022.
🤔📈#BTC open rates continued to fall last week after the August 17 sell-off, hitting the lowest level since Terra’s collapse in May 2022.🗓️ pic.twitter.com/M5L07ReabY
— Kaiko (@KaikoData) August 29, 2023
As August drew to a close, public interest in digital assets finally dropped to a level not seen since the Terra network collapsed in May 2022. This suggested that getting into Bitcoin could be a good opportunity, but that would not be true. too long afterwards.
On the same day, news came that Grayscale had prevailed in court over the US Securities and Exchange Commission (SEC) over its bid to reconsider the Spot Bitcoin ETF application. This triggered a rapid upward trend in the price of the digital asset and open interest followed.
Bitcoin open interest is already seeing double-digit growth on some exchanges, according to data from Coinglass. Open interest on the dYdX exchange is up more than 35%, and cumulative open interest on all exchanges is now in the green, up 9.55% in the last 24 hours.
Open interest recovers following Grayscale win | Source: Coinglass
Does this mean BTC will continue its uptrend?
For now, Bitcoin’s price is still driven purely by the hype of the grayscale victory. This means there is no telling how long the uptrend will last and when it will correct down. However, as long as investors remain optimistic about victory, BTC will continue to enjoy green days.
When it comes to open interest, a recovery is not always a good thing, as it paves the way for short positions to enter the market. For example, a look at Keiko’s chart shows that open interest was high leading up to the collapse of the FTX in 2022. When Bitcoin’s price was on the rise in early 2023, open interest fell before picking up steam again .
For now, BTC is still enjoying the spike in attention. The price of the cryptocurrency is up 5.35% in the past 24 hours and is trading at USD 27,349.
BTC retraces after touching $28,000 | Source: BTCUSD on Tradingview.com