Bitcoin (BTC) Open Interest Approaches All-Time Highs, Suggesting Extended Rally May Be Primed

According to a recent CryptoQuant Quicktake post by contributor Avocado_onchain, Bitcoin (BTC) may be primed for an extended rally.

According to a recent CryptoQuant Quicktake post by contributor Avocado_onchain, Bitcoin (BTC) may be setting up for an extended rally. The top cryptocurrency’s open interest in the futures market is approaching

The analyst noted that past instances saw Bitcoin’s open interest quickly surge after it broke above a previous peak, which is highlighted in red in the chart. This is quickly followed by a significant price rally, as shown by the yellow arrows and green circles on the chart.

Although the current level of open interest has yet to surpass the previous high, its steep upward trajectory suggests it may soon do so. If this level is breached, there is a strong likelihood that BTC’s price could follow suit and break past its current all-time high (ATH).

However, Avocado_onchain cautioned that excessive open interest can create an over-leveraged environment, heightening the risk of liquidation events and volatility. But BTC funding rates remain largely stable for now.

For the uninitiated, funding rates are periodic payments between long and short traders in perpetual futures contracts, meant to keep contract prices aligned with the spot market. In BTC’s context, positive funding rates indicate more demand for longs, while negative rates suggest more demand for shorts.

Currently, overall funding rates across futures exchanges show a slight long bias without reaching overheated levels. Interestingly, Binance (BNB) – the largest crypto exchange by trading volume – shows a short bias dominance, helping to maintain market equilibrium.

Crypto analyst Ali Martinez also noted this in a recent post on X, where he observed that 63.76% of traders on Binance are currently positioned short. This further cements the idea that the current rise in open interest is driven by healthy long positioning rather than speculative excess.

Moreover, Bitcoin’s renewed upward momentum has begun to reflect in key on-chain indicators. The MVRV ratio, a metric often used to gauge market sentiment, has started to rise—another indication of growing investor confidence.

Similarly, the Bitcoin SOTT indicator recently flashed green, a signal that has historically foreshadowed major rallies.

As of writing, BTC trades at $97,569, up 0.5% over the past 24 hours.