Bitcoin has extended its upward momentum last week and at that time has won nearly 6% and 1.8% in the last 24 hours. At the time of writing, BTC acts at $ 120,499 and maintains its position near an important resistance zone between $ 119,000 and $ 120,000.
Market data indicates that traders keep a close eye on this price area, given its meaning in earlier price action in July. Recently analysis From cryptoquant Arabic chain employee shows that Bitcoin’s Open Interest (OI) on Binance has risen to around $ 13.7 billion and approaches its highs from mid to late July.
This statistics, which follows the total value of outstanding futures contracts, is often used to gauge market participation and potential volatility. The current levels suggest a remarkable structure of speculative positions as the price approaches critical resistance.
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According to the Arab chain, a simultaneous increase in both price and open interest usually signals the access to new speculative liquidity, probably of traders who take long positions.
Although this can support price increases in the short term, it also increases the sensitivity of the market for corrections. If open interest grows faster than the price, the rally can become excess, making the market vulnerable for a long squeeze in the case of a sharp withdrawal.
The range of $ 119,000 – $ 120,000 has acted as a decision point in recent months. An outbreak above this level with stable or somewhat decreasing open interest may indicate that the move is powered by spot purchase or short cover, which generally entails less liquidation risk.
In this scenario, Arabic chain sees the potential for BTC to focus on the range of $ 122,000 – $ 124,000. However, a sharp rejection at these levels with increased open interest can cause driven decreases in the vicinity of the nearby support due to liquidation.
Monitoring of open interest trends for confirmation
Open interest is currently just below the highest point of approximately $ 14 billion, so that the limited space is brought for further structure of leverage before he reaches historical extremes.
Arabic chain notes that after a decrease in both price and OI from the end of July to the beginning of August, which points to capital that the market left, both have since been tied back, which suggests that renewed trust among derivatives traders.
The analyst warns that a significant jump into open interest without a corresponding price output, or worse, with a price decrease, would indicate a survival drilling.
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Conversely, price stability or profit above $ 120,000 would be, while open interest is stable or something is falling, being a healthier sign, indicating that the move is supported by actually buying instead of excessive leverage.
At the moment the Intraday trend Bullish remains, but the durability of this movement depends on whether stabilizing lever levels as Bitcoin test resistance.
Traders will probably concentrate on how BTC behaves around $ 120,000 in the coming days, with open interest dynamics that serves as an important signal for the next directive movement.
Featured image made with Dall-e, graph of TradingView
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