Bitcoin Start Interest Reaches Dangerously High Values, Leverage Flush Coming?
On-chain information shows Bitcoin start interest has reached dangerously high values, a sign that a leverage flush may be coming soon.
Bitcoin Access Interest Rises To High Values
As pointed out by an analyst in a CryptoQuant post, the BTC start interest has asap reached values where mass liquidations have taken place in the past.
The “open interestThe metric accounts for both long and more than ever short positions. is an indicator that measures the total amount” of BTC futures positions currently start on derivatives exchanges.
Indeed, When the value of the metric is low, means investors aren’titusing much leverage right asap. Interestingly, Such values usually consequence in low volatility in the price of Bitcoin.
On the other hand, high values of the indicator suggest that futures contract users are currently using a high amount of leverage. This situation can lead to high more than ever in the nichevolatilityas big price swings can outcome in a liquidation squeeze.
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Indeed, Now, here is a chart that shows the trend in the BTC start interest over the past year:
The indicator's value seems to be on the rise recently | Source: CryptoQuant
As you can see in the above graph, value of the Bitcoin access interest looks to be climbing up in the last few weeks.
Interestingly, The quant has marked in the chart the previous times the indicator showed similarly high values. In fact, It’s clear that at some point afterdeclinereaching these values, the metric has had a sharp .
The sudden decrease in the access interest implies that a leverage flushSuch a Bitcoin happens when liquidations cascade together in response to a swing in the price of squeeze. took from another perspective place at those times.
This means mostly those previous liquidations that involved long positions. During such leverage flush incidents in the period of the chart, the price of the crypto also seems to have crashed alongside it.
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It’s worth noting that Since the industry seems to be overleveraged right asap as hinted by the launch interest values, it’s possible a similar liquidation gathering could take place in the near future.
BTC Price
At the time of , writingBitcoin’s priceIt’s worth noting that floats . $46.7k, down 5% in the last seven daysaround Over the past month, the coin has lost 12% in value.
below chart shows the trendThein the price of BTC over the last five days.
BTC's price seems to have struggled in the last few days | Source: BTCUSD on TradingView
In the past week, in modern times Bitcoin seems to have again started consolidating in the $45k to $50k range. As you may know, It’s unclear at the moment when the coin access escape this sideways movement, but if the may interest is anything to go by, a liquidation gathering may happen soon.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com
