Bitcoin Open Interest Has Crashed Down As Shorts Have Seen Squeeze

Data shows that Bitcoin's open interest has plummeted as BTC has crossed the $60,000 level, suggesting that large liquidations have occurred.

Bitcoin’s open interest has taken a nosedive as the coin has crossed the $60,000 level, suggesting that large liquidations have taken place.

Bitcoin Open Interest Has Crashed Down As Shorts Have Seen Squeeze

In a recent post on X, CryptoQuant Head of Research Julio Moreno discussed the latest trend that has developed in the Bitcoin Open Interest. The “Open Interest” here refers to an indicator that keeps track of the total number of derivatives positions related to BTC currently open on all exchanges.

When the value of this metric goes up, it means the investors are opening up new positions in the market right now. As the total leverage in the sector usually increases when new positions pop up, this trend can lead to more volatility in the asset’s price.

On the other hand, the indicator registering a decline implies either the holders are closing up positions of their own volition or getting liquidated by their platform. Generally, the price becomes more stable following such a trend due to the decreased leverage.

Now, here is a chart that shows the trend in the Bitcoin Open Interest over the past week or so:

In the graph, the Bitcoin Open Interest is the BTC-denominated one, rather than the USD one, as is normally the case. The advantage of it being denominated in  BTC is that its value doesn’t get skewed by changes in the coin’s price.

The chart shows that the indicator had observed a sharp plunge a few days ago as the asset had gone through a crash. This crash caused a large amount of long liquidation, thus resulting in the decline of the metric.

During the past 24 hours, the reverse appears to have occurred, as a sharp rally has instead induced a high amount of short liquidations in the market. Naturally, the Open Interest has seen another plummet, thanks to this.

Data from CoinGlass provides the exact numbers involved in the latest Bitcoin short squeeze.

As visible above, Bitcoin-related contracts have seen liquidations amounting to more than $94 million over the past day, almost double what the second-placed Ethereum (ETH) has seen (just under $53 million).

The entire cryptocurrency derivatives sector has suffered liquidations of $212 million inside this window. Shorts have made up for most of this flush with $137 million in liquidations.

Given the massive scale of the short squeeze, it’s likely that the sharp Bitcoin price move-up was in part fed by this cascade of liquidations.

BTC Price

At the time of writing, Bitcoin is floating around $60,300, down around 8% over the last seven days.