Bitcoin appears to be at a crossroads. As the crypto approaches $70,000, a speculative frenzy is growing in the shadows. A phenomenon which could well turn against him in the short term. With the explosion of open interest in the futures markets, BTC finds itself in a high-risk situation. The question is: will the current bullish momentum hold up in the face of this rampant speculation?
A tense rise in the price of bitcoin
Bitcoin crossed the $69,500 mark on October 21, a milestone marked by euphoria. However, behind this spectacular rise, doubts are beginning to emerge. This level has not been reached for months, and market participants are more nervous than ever.
The political context, particularly the potential impact of the US elections, appears to play a major role. Some analysts even mention a correlation between the rise of bitcoin and Donald Trump's chances of winning the presidential election.
But be careful, this skyrocketing price is not without risk. Indeed, open interest (OI) in futures contracts has reached all-time highs.
However, such an increase in open positions is not always synonymous with stability for bitcoin. If traders' speculations do not materialize, a sharp correction could hit the market, reversing the current bullish momentum.
The Snowball Effect of Open Interest
As indicated the reportthe explosion of open interest is not a mere technicality.
In theory, a high OI reflects growing optimism, but here it could cause the opposite effect. If the spot market does not follow the expected upward momentum, we could witness an unexpectedly violent correction in bitcoin.
The market then becomes vulnerable to what is called a “short squeeze”, where open positions are liquidated in a cascade, increasing volatility.
Most worryingly, the fundamentals seem to be overshadowed by this speculation. The more the market swells with unfulfilled promises, the more violent the fall could be.
The next few days will therefore be decisive in knowing whether Bitcoin will break through this resistance, or whether it will undergo a return to reality which could shake the entire market. Some still hope to see bitcoin at $80,000.
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