Bitcoin open interest rises sharply as traders warn of big volatility to come

BTC’s open interest (OI) surged by more than $2 billion in just three days, leading traders to believe this could trigger a sudden “shock” effect in its price.

“Bitcoin open interest has surged over the past 3 days,” noted anonymous cryptocurrency trader Daan Crypto Trades in a June 5 post on X. Open interest is the total number of derivative contracts (such as options or futures) that have not yet been settled — an increase in open interest could indicate more traders are speculating.

Kelly Kellam, director of BitLab Academy, explained that the sudden spike in Bitcoin open interest and the persistence of positive funding rates indicate that Bitcoin price is “likely” to see a shock move — that is, a sudden surge in price that goes in the opposite direction of the current trend.

“With positive premiums persisting (everyone is long leveraged) and open interest rising, this is a recipe for a minor BTC correction,” he added.

According to data from CoinGlass, Bitcoin’s open interest jumped by $2.02 billion in three days, reaching $36.92 billion on June 6.

Bitcoin open interest has increased significantly over the past three days. Source: CoinGlass

Open interest is the total number of derivative contracts (such as options or futures) that have not yet been settled.

Large amounts of open interest can increase price volatility, especially when traders hold multiple positions and decide to suddenly adjust their strategies.

It also affects the overall sentiment of traders who use open interest as a signal to decide whether to hold or sell crypto assets.

According to CoinMarketCap, Bitcoin is currently trading at $70,890, up 4.23% over the past seven days.

Bitcoin is up 10.42% in the past 30 days. Source: CoinMarketCap

About $1.96 billion in long positions could be wiped out if the bitcoin price drops sharply by 4% to $68,000 — a possibility that cannot be ignored despite overall negative market sentiment, said anonymous cryptocurrency trader Jelle.

“While I believe Bitcoin will soon enter a price discovery phase, I am certain that this will not occur without significant volatility,” they added.