Bitcoin is up nearly 2%, taking the broader crypto market down with it.
In the last 24 hours, leading the altcoins is PEPE up 7.4%, closely followed by SHIB and HBAR each up 7%, TON up 5.6%, SNX up 5.4 %, and SOL with 4.6%. Total crypto market capitalization increased to $1.18 trillion (+1.35%), while Bitcoin dominance increased to 50.63%.
Reasons for the Rise
The market euphoria was initially sparked by the news from Bloomberg’s Eric Balchunas. He shared that sources inside BlackRock and Invesco suggest that the approval of a Bitcoin ETF is a matter of “when” rather than “if” and is likely to materialize within the next four to six months.
The source of this information was Galaxy Digital CEO Mike Novogratz, who made the disclosures during a recent earnings announcement. This news, hinting at the imminent approval of a Bitcoin ETF, made waves in the Bitcoin and crypto community, sparking optimism and speculation. Following this news, whale activity was also a key driver of the increase. CryptoQuant CEO Ki Young Ju tweeted that Bitcoin whales opened gigalong positions at $29k.”
In addition, he shared screenshots of the buyer-buyer-seller relationship on BitMEX, ByBit, Deribit, and Huobi Global. Each chart shows a sudden, extremely high jump in buying volume, presumably from whales, Ju said.
The Importance of the Open Interest (OI) Metric
Ali Martinez, a renowned analyst, addressed the importance of open interest. He noted that open interest, which represents the total number of open long and short positions across all crypto derivatives exchanges, hit a notable year-to-date high of $10.086 billion.
This metric is particularly notable because it has historically been highly correlated with the price of Bitcoin. Bitcoin’s recent drop to $28,700 seems to have been an opportune time for traders to take a bullish stance, suggesting that Bitcoin could be headed for further bullish momentum.
Open interest is a useful guide to see how much activity there is in the market. When the price of BTC is trending higher and the OI starts to rise very quickly, it may be an indication that the market may be becoming unsustainable as a lot of new money is coming in to trade. The opposite also happens. So it can be useful, in the toolkit for Bitcoin investors, to identify periods of extreme activity in the bitcoin derivatives markets.
CryptoQuant’s Julio Moreno noted a sharp rise in the Coinbase premium, indicating increased demand for Bitcoin in the US. This observation aligns with GB BTC’s declining discount, which many see as an indicator of the potential success of Grayscale vs. the US Securities and Exchange Commission (SEC) in its lawsuit over a spot ETF, but also as an indicator of the likelihood of Bitcoin Spot ETF approval.
From a market perspective, the euphoria in the market has led to a short tightening. A total of $37.19 million in BTC shorts were liquidated yesterday, $65.46 million in the general crypto market. Bitcoin’s short sale was the highest since July 13, when the price rose to its yearly high of $31,820.
As spot markets paid a premium and futures market funding rates fell, short sellers, were gradually liquidated. This means that the rally was mainly driven by cash markets rather than excessively leveraged long positions and whales played a key role in this.
By Audy Castaneda
