Bitcoin and the cryptocurrency market have recently seen notable activity. Crypto analysis platform CoinGlass shared on August 16 that despite Bitcoin’s price drop, open interest (OI) in futures increased. This situation creates uncertainty about market direction and raises the possibility of a price decline. The increase in open interest indicates that investors are taking more risks in both long and short positions.
Increase in Leverage Usage
Data from CoinGlass shows that as of August 16, total open interest in Bitcoin futures reached $29 billion, and this increase continued throughout the week. During the same period, Bitcoin declined by 5%.
The increasing use of leverage in the market can intensify price movements in both directions. The sudden 20% drop on August 5 is considered a result of high leverage usage.
Negative Funding Rates in Effect
Along with the increase in open interest, CoinGlass data shows that negative funding rates are also in effect. In crypto-based derivative markets, negative funding rates occur when the price of futures contracts trades below the spot price of the underlying asset. This scenario makes it costly for investors to maintain long positions while increasing interest in short positions. Such market conditions can strengthen the downward trend in Bitcoin prices.
Towards the end of the week, on August 16, approximately 24,000 Bitcoin options contracts will expire, with a total value calculated at $1.4 billion. However, such option expirations generally have limited impact on spot markets. In contrast, the clearing of large leverage accumulations from the market can have a more significant effect on prices.
Current Bitcoin Price Situation
In the last 12 hours, Bitcoin experienced a 3% drop, and on the morning of August 16, Bitcoin was trading just above $58,000. This downward trend, combined with the increase in open positions in the futures market, creates a scenario that investors need to monitor closely.
The nature of cryptocurrency markets is known to be full of uncertainties. However, indicators such as increasing open interest and negative funding rates suggest that Bitcoin and cryptocurrency prices may fluctuate more in the coming days.
