Return of Bitcoin leverage signals impending market volatility

Quick Take

• Over the past 24 hours, Bitcoin witnessed a remarkable surge, breaking the $28,000 mark, while its dominance in the market capitalization rose above the 50% threshold.
• There was a revival of spot buying, resulting in over $150 million worth of Bitcoin being withdrawn from exchanges, as shown below.
• According to Coinglass, open interest also saw a significant rise.
• ‘Open interest’ refers to contracts traded but not yet liquidated by an offsetting trade or an associated exercise or assignment.  It provides an indication of the liquidity and activity in a particular market.
• The total Bitcoin in open interest contracts has reached a substantial 475,000 units, a peak not witnessed since March.
• Open interest now comprises over 2.2% of the Bitcoin market capitalization, nearing the year-to-date high.
• This suggests an increase in futures contracts, potentially implying greater volatility and trading volume.

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