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Here’s who was behind Bitcoin’s rally to $22,000 according to Open Interest



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Here’s who was behind Bitcoin’s rally to $22,000 according to Open Interest


Bitcoin rose to $22,000 last week to the surprise of investors. It was an unexpected move by the digital asset, but it certainly did a good number on market sentiment during this time. The cryptocurrency has since lost a good chunk of its gains from that rally, but a look back at open interest at the time shows what was behind the rally.

Derivatives traders dominate the market

The open interest in bitcoin had increased significantly over the last week. This is not a surprise given that the latest rally also came on the back of a surge in open interest. Notably, open interest hit a new all-time high on July 8, just as Bitcoin made its remarkable rally.

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The data shows that on that day, open interest reached its new high at 352,722 BTC. Unsurprisingly, this figure had fallen rapidly, not unlike the moves that had followed previous rallies to new all-time highs. However, this indicates that rising new ATH open interest led the rally to $22,000. Specifically, it was derivatives traders who defended the move.

Other important information arguing that derivatives traders were behind the rise was the offshore base. It had recorded a significant drop in the same, where the CME fell to 1% from its previous 2.5% on Friday. This followed the same drop in bitcoin price after breaking above $22,000.

Open Interest Hits New All-Time Highs | Source: Arcane Research

Open interest denominated in Bitcoin remains high. Even after the drop, it managed to stay at 330.00 BTC. That puts it at the June 13 highs that followed the surge to $23,000 last month.

Bitcoin volatility continues to settle

With the push above $22,000, market stability was a must. This by no means meant that volatility had been completely eliminated, but within seven days, bitcoin’s volatility was able to stabilize at 2.7%. Compared to the 30-day volatility range of 4.6%, it is quite low and sets the tone for the next 30 days.

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Several factors are behind this drop in volatility and they have a lot to do with the events that triggered the bear market. An example is the day after the Three Arrows Capital liquidation. With the liquidation filing, the market has now started to return to normal as the fate of the hedge fund is decided.

BTC Settles Above $20,000 | Source: BTCUSD on TradingView.com

Others include lending platforms like Voyager Digital and Celsius filing for Chapter 11 bankruptcy. These two platforms have kept investors on their toes for the longest time not knowing when they will get their funds back and the bankruptcy filings have at least shown a way of resolution. . Whether this is good or bad remains to be seen.

However, this period of relative calm is unlikely to last. With inflation numbers so high and global economic strains, the coming months could see big swings in volatility.

Featured image taken from charts by Arcane Research and TradingView.com

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