Bitcoin Perpetual Open Interest Rises As Traders Bet On Year-end Rally

Bitcoin perpetual open interest climbed to 310,000 BTC while funding rates doubled, signaling bullish positioning for the year-end.

Crypto derivatives markets are heating up as Glassnode reports perpetual open interest has risen in anticipation of a big move at the end of this year.

Perpetual open interest (OI) has risen from 304,000 to 310,000 Bitcoin (BTC) as its price briefly touched $90,000 on Monday, Glassnode said on Monday.

The funding rate has also “heated up” from 0.04% to 0.09%, which suggests derivatives traders are anticipating a potential market move by the end of the year.

“This combination signals a renewed buildup in leveraged long positioning, as perpetual traders position for a potential year-end move,” Glassnode said.

Bitcoin perpetuals are futures contracts that don't expire and can be held indefinitely. They track Bitcoin’s spot price through a mechanism called the funding rate, which is a periodic payment between traders holding long and short positions.

When funding rates are increasing, it typically means the perpetual price is rising above spot, and more traders are bullish as they are willing to pay premiums to hold long positions.

However, it can also signal potential market overheating as extremely high rates can indicate overleveraged longs and possible correction risk.

Bitcoin failed to make progress above $90,000 and had fallen back to $88,200 at the time of writing.

Market volatility could also be amplified by the massive end-of-year Bitcoin options expiry event on Friday, Dec. 26.

Source: CoinTelegraph