Bitcoin Open Interest Remains High Despite 20% Price Drop

The Bitcoin open interest has remained elevated despite recent price declines, indicating sustained interest in the leading cryptocurrency by market cap. This high level of interest is generally positive for the crypto market, especially in the long term. However, historical trends suggest that such high open interest could impede a recovery in the Bitcoin price.

Data from the Coinglass website reveals that the Bitcoin open interest is still significantly high, not far from its November 2024 peak when the BTC price reached a new high above $109,000. This high open interest indicates that traders are still taking substantial positions in the digital asset, despite the price falling over 20% since then. This could potentially hinder a recovery.

The total Bitcoin open interest is currently at $56.17 billion, down approximately 22% from its all-time high of $71.85 billion. This decline in open interest closely mirrors the price drop, suggesting a strong correlation between the two. However, the sustained high open interest could have negative implications for the BTC price and the broader crypto market.

Historical data shows that Bitcoin has experienced its largest upward movements when open interest was low. This suggests that reduced market pressure allows bulls to drive the price higher. With the current high open interest, pushing the price upward could be more challenging. Consequently, the BTC price might see further declines before a recovery.

A crypto analyst has also provided reasons why the BTC price could experience a crash. One factor is the fake bullish divergence, where the Relative Strength Index (RSI) shows a bullish divergence, but the price action does not follow. This could lead to a bull trap, causing traders to incur losses as the price crashes.

Another factor is the Bitcoin price breaking a trendline support after falling to the low $80,000s. This indicates weakening bullish momentum and suggests that the recent recovery might not be sustainable. Given these factors, the analyst predicts that the Bitcoin price could fall another 20%, targeting $69,149, which is an all-time high from 2021. This level coincides with the intersection of the mid-channel support line and horizontal price structure.