How Bitcoin derivative traders put BTC in a tight spot

bounce from $60,731 to $63,049 has not deterred traders from opening short contracts, AMBCrypto confirmed. But historically, a high number of short positions could be great for BTC’s price.Unlike the spot CVD, the Taker Buy/Sell CVD tracks activity in the derivatives market. For those unfamiliar, it gives the difference between longs and short positions.

The green area infers that long exceeded shorts. But at press time, the metric was in the read region, indicating that shorts were dominant.“However, the historical pattern shows that after a period of dominant market shorts, Bitcoin price either moves sideways or rebounds sharply.” However, there was another twist to Bitcoin’s situation. This time, it involved the Open Interest . OI is the number of outstanding contracts in the futures market.

Sometimes back, AMBCrypto reported how the OI was one of the major catalysts that triggered BTC’s rise to $73,000. At press time, Glassnode’s data showed that the OI has been decreasing.their previously open contracts. If we go by a similar situation that happened during the 2021 bull cycle, Bitcoin’s correction might not be over.However, another nosedive from the press time level could see this number cut short.

The result of this tells if it is risky or not to trade BTC. Low values of the Realized Volatility imply it might not be risky to long or short Bitcoin.As things stand, prices could fluctuate either way, and high-leverage bets could face massive liquidation. In addition, the value of BTC has more tendency to decline once more before a notable recovery.Victor is a full-time journalist at AMBCrypto.

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