This is an editorial opinion by Mike Ermolaev, Head of Public Relations at ChangeNOW Exchange.
Whether you’re a retail trader or someone who just started with Bitcoin a long time ago, you’re probably looking for a clue as to what to expect next with the price. A second opinion is also important for experienced Bitcoin investors to compare their own views.
Analyzing open Bitcoin futures needs
Bitcoin open interest lets you know how much money is flowing into the Bitcoin derivatives market. Futures like bitcoin futures and futures exchanges are used by traders to predict whether the price of bitcoin will rise or fall without owning the digital asset. A higher bitcoin open interest means more traders have opened positions, while a lower one means more traders have closed.
In the year At the beginning of April 2022, known open interest in Bitcoin increased to 592,000 BTC from 350,000 BTC.
In USD terms, the current open interest is $13.67 billion, which is relatively low, compared to the bull market level of the January 2021 and June 2021 sales lows.
When there is a big increase in open interest in BTC, but on a per dollar basis, this is a sign that markets are taking more BTC exposure, but still don’t expect it to move much.
Funding rates for permanent swaps have increased.
To understand how most traders position themselves in the market, we can look at the funding rates used on perpetual swap contracts: unlike bitcoin and cryptocurrencies, consumer financial contracts have no expiration date and no contracts. They allow traders to take advantage of up to 100x when betting on the price of Bitcoin. Funding rate is a periodic fee paid to a trader who is long or short based on the difference between the forward contract price and the spot price.
In general, a positive funding rate indicates that traders are taking long positions and generally believe that the price will move higher, while a negative funding rate indicates that traders are taking short positions and are generally at a lower level, believing that the price will move down. Over 0.005% down funding has increased the estimated premium, a trend that is currently being observed.
Bitcoin price is above the 50-day simple moving average.
Analysts like myself, who use technical analysis charts and patterns to make investment decisions, note that Bitcoin is currently trading above its 50-day simple moving average (SMA) – an effective trend indicator – for the first time since mid-July. This ensures that the underlying energy is building.
Long-term holders view Bitcoin as an attractive risk/reward investment.
Below is another chart showing how long-term BTC holders feel about bitcoin relative to its price. Long-term owners of Bitcoin are generally better at identifying the best time to buy and sell Bitcoin. This is not surprising as they have more experience in the field than newcomers who are just starting out. It is important to know when you are sure that the number one cryptocurrency will increase in value in the future.
The reserve risk chart is currently in the green zone, which means that the high level of confidence, combined with the low price, makes bitcoin an attractive risk/reward investment. Investors who invested during the greenback risk period saw significant returns over time.
When making their traditional investment decisions, the market perception of various prudent market participants indicates that they are confident about the future value of Bitcoin and are willing to take on more price risk. There is a cautious upward bias in bitcoin derivatives markets and long-term investors seem fairly confident. Bitcoin price is also showing signs of improvement based on technical indicators.
Disclaimer: This is not financial advice. All opinions, statements, estimates and predictions expressed in this article are solely those of Mike Ermolaev, Head of PR at ChangeNOW.
This is a guest post by Mike Ermolaev. The opinions expressed are solely their own and not necessarily those of BTC Inc. Nor do they reflect Bitcoin Magazine.