Bitcoin open interest surges, fueling bullish sentiment to a new high
Bitcoin's Market Sentiment Rebounds as Futures Open Interest Hits All-Time High
Recent market data shows a surge in investor enthusiasm for Bitcoin, as open interest in futures contracts linked to the digital currency has reached an unprecedented high, according to derivatives analyst Greg Magadini of digital asset data provider Amberdata. Magadini made this revelation via Telegram, stating that the rise in open interest coincides with a bullish market sentiment, as Bitcoin prices continue to trend upward.
The chart below demonstrates the escalating open interest in Bitcoin futures:
In addition, the broader crypto market has also demonstrated robust strength in recent times, with open interest in futures contracts setting new records, Magadini added.
Another illustration of this development is presented in the chart below:
The approaching expiration of billions of dollars' worth of Bitcoin options on May 30, 2025, according to Deribit data sourced from a recent CoinDesk article, could also impact the digital currency's market sentiment.
Magadini further stated via email that Friday's expiration contains a sizable amount of positive dealer gamma at $110,000, the current all-time-high for Bitcoin. This indicates that market-makers had been selling Bitcoin at these levels, which could explain the stagnation in Bitcoin prices.
Looking at all expirations, Magadini highlighted that the peak gamma for Bitcoin currently stands around $121,000, suggesting further upward price movement, although a significant catalyst might be needed for a dramatic breakout.
Paul Howard, Senior Director at crypto trading firm Wincent, also weighed in on the subject. He pointed out that Bitcoin volatility remains near historic lows but could escalate leading up to the options expiration, potentially reaching the 45 implied volatility level. Additionally, the price gap below the $90,000 mark has been filled, reinforcing the bullish case for continued upward momentum in the coming months.
Howard also emphasized that as the market moves into the summer period in the Northern Hemisphere, thinning liquidity could lead to more pronounced price swings. Despite this expected increase in volatility, downside moves below $100,000 appear less probable than an upward push beyond the $110,000 level.
Howard noted that the current options market data shows significant open interest in call options, pointing to a largely bullish sentiment. Strikes at $112,000 and $115,000 for the current and upcoming expiry cycles are particularly noteworthy, as they indicate traders positioning for further upside in Bitcoin's price trajectory.
In essence, while specific data on open interest and options expiry is not provided in the report, overall, the market sentiment towards Bitcoin appears optimistic, with predictions of price increases in June, although corrections are also anticipated.
Related Background Information:
- An increase in open interest in futures contracts usually signals growing investor participation, potentially signaling a bullish market sentiment.
- Options expiry can trigger market volatility as traders adjust their positions to maximize returns or minimize losses. A high concentration of call options at a specific price level can promote price movements towards that level.
- Both Magadini and Howard's analysis suggests that Bitcoin's price is expected to exceed $100,000 in June 2025, but there are also predictions of potential corrections due to profit-taking and thinning market liquidity.
- Given the all-time high open interest in Bitcoin futures and increased open interest in other cryptocurrencies, the democracy of investing in digital assets like Bitcoin through technology-based finance seems to be gaining traction among investors.
- The approaching expiration of Bitcoin options, possibly causing market volatility, and the notable open interest in call options with strikes at $112,000 and $115,000 for the current and upcoming expiry cycles, indicate that technology-driven investing in digital assets like Bitcoin is likely to remain a buzz in the finance sector, with predictions of a bullish market sentiment and price increases in June, albeit with some predicted corrections.
