Analysts say Bitcoin’s open interest wipeout ‘will give way to further upside’

Fear remains the predominant short-term sentiment in cryptocurrency markets. Bitcoin (BTC), which dropped to $47.250 today, and investors are gnashing their teeth after U.S. consumer prices index (CPI), data showing that inflation reached a forty-year high of 6.8%.

TradingView and Cointelegraph Markets Pro data show that bulls attempt to reclaim $50,000 was defeated by sellers. This resulted in the price falling below $48,000, which could lead to another lower daily high for the top-ranked cryptocurrency.

BTC/USDT 4-hour chart. TradingView

With the possibility of a significant price increase at the end of the year, traders have turned their attention to managing risk. They are now able to identify the best places to buy dips. Here are some thoughts from analysts about Bitcoins future outlook for 2022.

Open interest wiping “will give way for further upside”

The open interest (OI), for BTC, on derivative exchanges has decreased significantly as was the case in past instances when the price of BTC fell rapidly. This is highlighted in a Delphi Digital report. This was due to the fact that long positions with excessive leverage were eliminated.

BTC futures open Interest vs. BTC Price Source: Delphi Digital

Although the experience was unpleasant for traders who were already overexposed, analysts said that deleveraging events such as this can be beneficial in the long-term and often lead to more upside.

Delphi Digital suggests that the sharp decline in OI in the last month could also indicate that BTC is nearing its short-term bottom. Its possible that the current selloff may have reached the point of exhaustion.

Delphi Digital said,

“The OI for BTC fell by 30% in the past 30 days, which was not surprising considering that it had been forming a bottom.

Trades in BTC within a range-bound environment until 2022

Jarvis Labs co-founder Ben Lilly says that Bitcoins price is likely to remain in the same trading range through the end of the month. This is due to the Dec. 31st mark being “the largest open interest” in open contracts.

Lilly cited previous examples of large drawdowns that resulted in high numbers of liquidations. He also explained that it has taken the market some time to recover momentum from these pullbacks.

BTC futures are open to interest. Source: Espresso

Lilly stated,

This is a great opportunity for anyone who wants to accumulate on a weekly or in the lowest portion of the current trading range.

Related: A trader who claimed 2017 Bitcoin price crash raised concerns about a double top.

Do traders need to look for a continuation of the uptrend

Analyst and pseudonymous Twitter analyst “Rekt Capital” provided the final insight by posting the following chart showing BTC price trading between key exponential moving averages.

BTC/USD 1-week chart. Source: Twitter

Rekt Capital said,

“BTC is consolidating within the two key EMAs at the moment. Similar to May 2021. Just like May 2021, new macro uptrend continuation will be preceded by price stability and consolidation between these two EMAs.

The total cryptocurrency market is now worth $2.238 trillion. Bitcoins dominance rate at 40.7% is also noteworthy.

com. You should do your research before making any investment or trading decision.