Bitcoin Price Declines to $53,000 While Open Interest in Futures Reaches a Two-Year High

The price of Bitcoin surged to $53,000 today. Here are some reasons why.

Source:www.trthaber.com

On Feb. 20, the Bitcoin price surged to a new high for 2024, reaching $53,019, but later experienced a sudden decline to $50,000 on certain exchanges. Traders attribute this price movement to ongoing spot BTC ETF inflows and the forthcoming supply halving event. As of the time of this update, the BTC price is above $52,000. Let's explore the main factors contributing to today's volatility in the Bitcoin price.

BTC/USD daily chart. Source: TradingView

Bitcoin Futures Open Interest Hits a 26-Month High

The open interest (OI) in Bitcoin futures has surged to its highest level in over two years, signaling heightened trading activity surrounding the leading cryptocurrency by market capitalization. According to data from the cryptocurrency futures trading platform Coinglass, the total OI for BTC futures reached $22.69 billion on Feb. 20, marking its highest point since Nov. 11, 2021, and coming close to the previous peak of $23 billion.

This increase in Bitcoin futures OI by more than 30% in 2023 correlates with Bitcoin's 23% year-to-date rally to $53,000, reaching levels last witnessed in December 2021. Open interest serves as a metric indicating the total value of all outstanding or "unsettled" Bitcoin futures contracts across various exchanges. A rising OI suggests increased market activity and trader sentiment surrounding the original cryptocurrency.

Inflows Into Spot Bitcoin ETFs Increase

Investor bullishness persists as inflows into spot BTC ETFs rise, despite increasing outflows from gold ETFs. Bitcoin has surpassed the $49,000 milestone set after the U.S. Securities and Exchange Commission's approval of spot Bitcoin ETFs on Jan. 10. Data from Farside Investors indicates that $4.91 billion has flowed into Bitcoin ETFs within six weeks since trading commenced on Jan. 11. Additionally, the CoinShares Digital Asset Fund Flows Weekly Report reveals that total weekly inflows into newly issued spot Bitcoin ETFs reached $2.5 billion last week. 

Upcoming BTC Halving

The forthcoming Bitcoin halving, anticipated to slash miners' rewards by half, is likewise projected to significantly boost investor enthusiasm in BTC. Historically, such halving events have led to Bitcoin embarking on a steep upward trajectory in the months following the occurrence. Generally speaking, buyers are gearing up for a fresh challenge to protect the support range between $52,000 and $51,700. Whether the price closes above or below this zone will dictate the next direction of Bitcoin's ($BTC) movement.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.