After the expiration of $11 billion worth of year-end options on December 29th, Bitcoin (BTC) and Ethereum (ETH) witnessed a price relaxation. The largest cryptocurrency, BTC, is expected to close the year below $44,000, while the biggest altcoin, ETH, is anticipated to end under $2,400. Despite the year-end rally coming to a halt due to record increases in funding rates, BTC and ETH continued to rise throughout 2023, supported by growing open interest (OI). Experts remain optimistic about the continuation of the uptrend despite high OI and funding rates.
The OI in the futures market for Bitcoin and Ethereum decreased after the December 29th options expiration and a recent pullback in the crypto market. Nevertheless, traders and investors maintain a positive outlook, expecting further increases. Current data shows that the total OI for Bitcoin futures across all crypto exchanges exceeds $18 billion, with CME and Binance recording OIs of $4.81 billion and $4.31 billion respectively, both rebounding after the recent drop. Similar figures are reported for other exchanges like Deribit, Coinbase, Bybit, and OKX.
Ethereum’s total futures OI is at $3.36 million, with the largest three crypto exchanges (Binance, Bybit, and OKX) showing a resurgence in total OI for Ethereum futures following the price drop. Crypto influencer Kamikaz noted that BTC and ETH’s OI was wiped out post-options expiration, but the anticipation of a spot Bitcoin ETF approval has deterred investors from short selling, leading to a rise in prices.
Experienced crypto analyst Credible Crypto agrees with Kamikaz that the market is on an upward trend. He clarifies that high funding rates are often mistaken for an excess of over-leveraged participants, while in reality, OI has been reset to levels not seen in years. “The funding rate is only relatively high because the majority of leveraged traders are in long positions,” he explained.
Data now indicates that the funding rate has fallen from record levels. The graph of Bitcoin’s OI-weighted funding rate suggests that a price increase is likely in the coming days, hinting at a potential upward movement for the cryptocurrency.
