Bitcoin's Rally Faces Scrutiny as Open Interest Surges, Signaling Potential Volatility

Bitcoin's recent surge above $99,000 is under scrutiny due to a significant rise in Open Interest, an indicator tracking open positions on derivatives exchanges. According to a CryptoQuant analyst on X, this increase, with a 24-hour percentage change peaking at 7.2% last week, suggests heightened leverage and potential volatility. Historically, such spikes in Open Interest during rallies have acted as resistance.

Glassnode, another analytics firm, highlighted the 1-week Realized Volatility, noting its recent plunge to levels only seen a few times in the past four years, such as October 2024 (22.88%) and November 2023 (21.35%). These compressions have historically preceded major market movements.

Currently, Bitcoin has recovered to above $99,300, following a 2% increase in the last 24 hours. However, the combination of rising Open Interest and low Realized Volatility suggests a potentially volatile period ahead for Bitcoin.