Bitcoin Perpetual Open Interest Suggests Short Squeeze Led To Crash

The Bitcoin crash of last week was a brutal one for the market. It saw the digital asset lose its footing from where it had been trending just below $ 30,000 to crash to the mid $ 17,000s before a recovery had begun. With the new week, the market had started to emerge into the green. But as bitcoin struggles to hold above $ 20,000, the question remains what had triggered such a crash.

A Short Squeeze

The bitcoin open interest in perps had been up over the last couple of weeks. This has continued to be the case through the market crash and the subsequent recovery. However, the open interest levels, mainly the rise and falls, leading up to and during the bitcoin crash have all of the makings of a short squeeze.

Related Reading | By The Numbers: The Worst Bitcoin Bear Markets Ever

On Wednesday, the open interest in bitcoin perps had eventually peaked at a new all-time high of 335,000 BTC after a week of unpredictable movements. This was when bitcoin had declined below $ 21,000. As the price of the digital asset had begun its recovery, the open interest in perps had quickly declined. Movements like these are associated with a short squeeze, which was the same in the case. One that preceded another crash during the weekend.

Open interest remains elevated | Source: Arcane Research

The same was the case over the weekend. The open interest in perps had once again surged, to 325,000 BTC this time, after erratic movement when the price declined to the mid $ 17,000s. Another decline in the open interest has since been recorded as the price of BTC has recovered, albeit slower this time around.

Bitcoin Perps Trading At A Discount

Bitcoin perps are still trading at a discount compared to the spot prices. This is no surprise given that the bitcoin funding rates have stayed neutral to below neutral even through the crash and the massive sell-offs. Additionally, there has been nothing significant that has happened in regards to the bitcoin perps through the crash and eventual recovery,

Funding rates

Funding rates below neutral | Source: Arcane Research

Interestingly, the funding rates have now remained below neutral with the price of BTC struggling above $ 20,000. One place where funding rates have had the most impact has been on Deribit. Since it is rumored to be closely intertwined with Three Arrows Capital (3AC), the decline in funding rates triggered insolvency fears and rumors tied to the crash of 3AC.

Related Reading | Bitcoin Miner Liquidations Threaten Bitcoin’s Recovery

However, it is important to note that Deribit has assured the public that it remains financially healthy even if the 3AC debts were forfeited. As the market has begun to move on from last week’s crash, the funding rates have begun to stabilize, although they remain slightly below neutral.

Bitcoin price chart from

BTC declines to mid-$20,000s | Source: BTCUSD on
Featured image from CNN International, charts from Arcane Research and

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

Original Article reposted fromSource link

Disclaimer: The website autopost contents from credible news sources and we are not the original creators. If we Have added some content that belongs to you or your organization by mistake, We are sorry for that. We apologize for that and assure you that this won’t be repeated in future. If you are the rightful owner of the content used in our Website, please mail us with your Name, Organization Name, Contact Details, Copyright infringing URL and Copyright Proof (URL or Legal Document) aT spacksdigital @

I assure you that, I will remove the infringing content Within 48 Hours.

Leave a Reply

Your email address will not be published.


Birthday Special : 10 Times Ranveer Singh made bold fashion statements in prints and patterns

It is well known that Ranveer Singh is a versatile actor with a beautifully honed craft of delivering his best in every film. But the other reason that always has him in the spotlight is his extravagant and experimental fashion outings. He’s never been the one to shy away from having fun with fashion. He’s […]

Read More

Sonic 2 Had The Best Soundtrack In The Series

It’s November 1992 and Sega has unleashed Sonic The Hedgehog unto the world again. Your parents have yelled your name for the second time, but you can’t hear them, for the sounds emitting from the Emerald Hill Zone have captivated your ears. Spaghetti night can wait, for no sound of a utensil or food cooking […]

Read More

Macy Gray Says She Has “Nothing But Love” For The LGBTQ+ Community

Macy Gray has broken her silence and released a statement following the backlash she received for comments she made that had her labeled as a terf. Macy told Billboard“I have nothing but love for the LGBTQ + and transgender community and have been a supporter since day one.” She continued, “My statement on Piers Morgan […]

Read More