As a seasoned researcher with years of experience under my belt, I can confidently say that the recent surge in Bitcoin price momentum seems to be fueled by the optimism surrounding Donald Trump’s US election win and the potential implications for cryptocurrency regulation. The record highs in Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) are particularly striking, indicating a significant increase in institutional interest.
The surge in crypto prices recently can be attributed to Donald Trump’s victory in the US election in early November, as he is a pro-crypto candidate. Since Trump, a strong advocate for digital currencies, became the leader of the world’s dominant economy, Bitcoin‘s price has risen approximately $30,000. There is hope that his administration may establish a strategic Bitcoin reserve and create a more approachable environment for financial regulators like the SEC towards cryptocurrency and blockchain operators within the United States.
Record Highs in Bitcoin Futures Open Interest
Based on data from Coinglass, the number of Bitcoin futures contracts open on the Chicago Mercantile Exchange (CME) reached a new high of approximately 218,000 Bitcoins or about $21 billion. This figure is more than a third greater than it was prior to the US election. In total, Bitcoin futures interest as reported by Coinglass currently stands at around 647,000 Bitcoins or approximately $62 billion. Velte Lunde, Head of Research at K33 research, characterized this surge in CME interest as “unyielding,” stating that the increase in open interest on CME over the past two weeks is greater than the average notional open interest on CME for any year prior to 2022.
The “open interest” refers to the overall count of unsettled derivative agreements for an asset, like options or futures, such as Bitcoin (BTC). An increase in open interest along with price increases signifies a bullish trend, implying that the market strongly believes BTC will continue its upward movement.
As a researcher, I find myself frequently utilizing the Chicago Mercantile Exchange (CME) as it’s primarily a hub for smart institutional investors, skilled trading desks, and seasoned asset managers. A significant increase in the Open Interest (OI) on CME is typically a robust bullish signal.
Sell Wall Stalls BTC’s March to $100k
As Bitcoin neared the $100,000 mark over the weekend, it experienced a setback. According to the trading signals account on X @MI_Algos, there was a “large BTC sell wall within the $99,300-$100,000 range.” A sell wall refers to a heavy concentration of sell orders at a particular price point. This serves as both a psychological and technical obstacle, making it harder for an asset’s price to exceed that level. Given the importance of the six-figure price milestone, it’s not surprising to find a sell wall around this price range.
The account went on to say, “It might be advantageous for whales to sell off significant amounts of Bitcoin (BTC) to induce a price drop and test the support level. This could eventually make it simpler to break through a resistance barrier.” In essence, MI_Algos is proposing that large-scale sell-offs could potentially create a beneficial situation.
Testing resistance levels in the future might be more straightforward due to this. A support level refers to a specific BTC price where strong demand usually prevents further drops and the US$94,000 price point has significant BTC support. If this support level is successfully tested, it’s likely that buyers will view the asset as underpriced. Consequently, there would be less resistance to sell when the resistance level is revisited, making the upward trajectory more apparent.
He also noted the impact of BTC spot Exchange Traded Fund (ETF)— “With the ETF faucet turned off for the weekend, we could see some dip buying opportunities ahead.”
According to data provider Glassnode, long-term holders are rapidly cashing out their Bitcoin. Specifically, they’ve sold over 128,000 Bitcoins since early October. However, this selling trend has been counteracted by the demand from US spot Exchange Traded Funds (ETFs), which have been absorbing approximately 90% of that selling pressure.
Based on this assessment, transactions made in both the spot and futures markets over the weekend will likely be reflected or accounted for when the U.S. spot Bitcoin ETF begins trading on Monday.
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2024-11-25 12:03