Open Interest in Bitcoin Rises $2.02 Billion
Bitcoin’s open interest (OI) has increased by over $2 billion in just three days, causing speculation among traders that it may lead to a sudden “whipsaw” effect on its price.
Daan Crypto Trades, a pseudonymous crypto trader, pointed out in a post on June 5 that Bitcoin’s OI has significantly risen in the past three days. OI refers to the total number of outstanding derivative contracts, such as options or futures, that have not yet been settled.
A rise in OI could indicate more traders speculating on the price of Bitcoin. According to Kelly Kellam, director of BitLab Academy, the sudden surge in Bitcoin’s OI, combined with the continuation of positive funding rates, suggests the possibility of a “whipsaw” action on Bitcoin’s price.
This refers to a sudden and dramatic price spike in the opposite direction of the current trend. Kellam also added that the increase in OI and the prevalence of positive funding rates, where traders are mostly taking leveraged long positions, could result in a small correction in Bitcoin’s price.
