According to popular belief, an increase in open interest during a surge in prices validates an upward trend. The value of the US dollar locked in open bitcoin (BTC) futures contracts is on the rise, indicating a rise in speculative interest and the possibility of price fluctuations. Coinglass data reveals that the open interest's nominal value has hit a yearly peak of $12 billion, representing a 7% increase for the month.
Over the last month, the value of bitcoin has surged by 15% to reach $28,439, owing to an expanding hunger for high-risk assets and a move towards quality investments within the cryptocurrency realm. Although a rise in open interest implies an influx of fresh funds into the market, it does not provide much insight into whether traders are strategizing for potential gains or losses in value.
As far as bitcoin is concerned, it appears that the fresh investments are inclined towards expecting an increase in value, given that the funding rate - which denotes the expense of holding bullish long or bearish short positions - has switched to a positive state after being negative during the initial phase of the Asian trading session. In general, a positive funding rate is suggestive of a bullish market trend as long positions compensate for short positions. Conversely, negative funding rates signify bearish market sentiment since short positions receive payment from those holding long positions.
According to a message from a trader based in Taipei who works at Quantrend Technology, a major market maker on Binance, bitcoin has reached its highest point since the Terra crash of last year. This development serves as a positive psychological indication that market sentiment is currently optimistic.