Bitcoin Sees Decline in Open Interest and Dominance as Market Momentum Slows
Bitcoin's performance during the final week of November revealed a notable reduction in Open Interest, signaling a potential decline in market enthusiasm.
This dip, coupled with a sharp correction in price, hints at changing investor behavior and a cooling of previous bullish sentiment.
CryptoQuant’s latest analysis highlights the connection between Bitcoin’s Open Interest, leverage, and liquidations, which peaked in early November. As the market became overly leveraged, Bitcoin’s price surge set the stage for a wave of liquidations. This was evident when $117.88 million in long positions were liquidated last Monday as Bitcoin fell below $93,000. The sharp price correction continued through the week, reducing Open Interest from $64.03 billion on November 22 to $60.17 billion by the end of the month.
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Although the drop in Open Interest suggests that speculative trading has decreased, the overall level still indicates significant market participation. The liquidations came on the heels of a speculative rally that had seen many traders taking on high-leverage positions. As Bitcoin’s price corrected from a peak of $99,800 to a low of $90,742, the market’s leverage ratio and overall sentiment cooled.
Despite some recovery to around $96,532, Bitcoin’s momentum remains weaker than in previous weeks. Bitcoin dominance, which had been rising steadily since the beginning of 2024, peaked at 61.53% mid-November before falling sharply to 47%. This significant decline points to diminishing liquidity for Bitcoin, likely driven by profit-taking and a shift in interest toward altcoins, suggesting that capital is leaving Bitcoin for more volatile assets.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
