Bitcoin has room to fall amid ‘unusual’ open interest: CoinGlass

Total open interest on Bitcoin futures hit $29 billion on Aug. 16 despite a decline in Bitcoin’s price.

Bitcoin may still have “more room to fall” as open interest (OI) has continued to rise amid recent price action, according to crypto analysis platform CoinGlass. 

In a post on X on Aug. 16, CoinGlass noted that it was “a bit unusual” that open interest has not reacted to Bitcoin (BTC) prices.

“I think there is room to fall.”

The platform reported that total OI on Bitcoin futures reached $29 billion on Aug. 16 and has been rising all week, while spot BTC prices have declined 5% over the past couple of days.

Open interest refers to the total number of Bitcoin futures contracts that have yet to be settled or expire.

“An increase in open interest means that both long and short positions are increasing,” said the firm.

Rising OI means there’s more leverage in the market, which can amplify movements in either direction.

This happened on Aug. 5, when leverage was flushed out, resulting in BTC dumping 20% in less than a day.

CoinGlass data also indicates that funding rates were negative. Negative funding rates in crypto derivatives markets occur when the price of the contract is trading below the spot price of the underlying asset.

This scenario could discourage traders from holding long positions, as they must pay to maintain these positions and incentivize more short positions.

Related: Bitcoin critical indicator prints ‘bearish cross’ as it sinks below $58K

The end of the week also has a crypto options expiry event, and Aug. 16 will see around 24,000 BTC contracts expire with a notional value of $1.4 billion, according to Deribit.

However, these events usually have a limited impact on spot markets, and large leverage buildups have a greater influence when they get flushed.

Bitcoin prices have declined 3% over the past 12 hours and the asset was hovering just above the $58,000 level during early trading on Friday, Aug. 16.