Get ready for volatility Bitcoins open interest reaches record high before FOMC meeting
Demand for Bitcoin is on the rise, with the derivatives market seeing a surge in open interest, reaching historical highs in a week filled with volatility. The cryptocurrency market is bracing for increased volatility as the FOMC meeting on June 12 approaches, with crypto traders making their moves.
Open interest (OI) measures the volume of both long and short positions that are currently active and open. Volatility kicks in as traders leverage their positions in search of the highest risk-reward ratio, causing aggressive movements in the price of Bitcoin through liquidations.
The higher the open interest, the more likely it is that there will be aggressive price moves as positions start to exert more influence on the spot market.
Crypto trader and analyst Ali Martinez, in a recent report, noted that Bitcoin’s open interest has reached an all-time high of $18.75 billion. This is seen as a sign of strong momentum and an indication of incoming volatility.
Market analysts had already anticipated a volatile week leading up to the Federal Open Market Committee (FOMC) meeting, where decisions on the Federal Reserve interest rate target would be made. These meetings have historically impacted Bitcoin’s price, bringing about increased volatility and open interest.
In a recent post, Martinez pointed out that Bitcoin typically rebounds after each FOMC meeting. Currently trading at $67,114, a rebound could potentially push it to $73,000 if historical patterns are followed.
According to a Bitcoin price prediction from ChatGPT-4o in the context of the interest rate decision, BTC could trade between $70,000 and $73,000 in a neutral outcome. A bullish outlook, however, could propel it above $75,000, setting new highs for the leading cryptocurrency. Investors need to exercise caution during the FOMC meeting hours as other cryptocurrencies are likely to follow Bitcoin’s lead.
Disclaimer: The content of this article should not be considered as investment advice. Investing in cryptocurrencies is speculative and comes with inherent risks to your capital.