Bitcoin open interest matches record high amid predictions of BTC price ‘fireworks’ this month

Bitcoin (BTC), a new forecast says, is poised for an “explosive price action” as derivatives markets return in 2022.

Vetle Lunde (an analyst at Arcane Research) confirmed in a tweet that BTC-denominated open interests (OI), had returned to their November record highs.

“Fireworks” in open interest are required within weeks

While Bitcoin options and futures have suffered a lot during the BTC/USD retracement at the end of the year, there was consensus that the market would rebound after the holiday period.

Some believe that institutional traders should be the main force in Bitcoin markets. Derivatives already show signs of this renewed interest.

OI has now returned to the levels it reached in week three of November, when BTC/USD hit all-time highs at $69,000.

However, unlike then, current funding rates are neutral, which is a crucial foundation for creating volatile moves.

“BTC-denominated open interests in BTC perpetuals have surpassed November highs today, with leverage accruing on neutral to slightly below neutral financing rates. Seems explosive tbh,” Lunde commented.

Annotated chart of BTC OI and Binance funding rates Source: Vetle Lunde/ Twitter

Lunde isn’t the only one. Filbfilb, the co-founder and chief executive of Decentrader trading platform, also noted the positive state OI activity in a separate post.

He wrote, “OI very high relative Market Cap… doubt it will go beyond the last week of this month with fireworks,”

Ethereum reaches its first 2022 high

Cointelegraph Markets Pro and TradingView data showed that BTC/USD traded at close to $47,380 as of Dec. 4. Meanwhile, the pair is recovering from a dip which saw it drop to its lowest level in two weeks.

Related: Bitcoin exchange balances return to historic lows, as BTC withdrawals resume January

Analysts were generally calm regarding the short-term action, but altcoins remained the main point of attention.

Michael van de Poppe, Cointelegraph contributor, stated that “the point of maximum financial potential for altcoins still exists,” reiterating his previous convictions regarding the opportunities offered by alt markets.

BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView

Ether (ETH), which is the largest altcoin market cap by market capital, hit $3,879 that day, marking its highest performance since 2022.

BITSTAMP: ETH/USD 1-hour candle charts Source: TradingView