Increase in the open interest of cryptocurrency: unlocking new negotiations
Because the cryptocurrency market is constantly growing, a new record has appeared, which attracts attention between traders and investors: open interest. Open interest rates relate to the number of contracts or expecting positions held by buyers and sellers in the bag. In this article, we will delve into the world of cryptocurrency of open interest and examine its consequences for the negotiations of Futures.
What is open interest?
Open interest is a measure of the number of contracts covered in the scholarship, including long and short positions. It is calculated by subtracting the number of open total contracts for expecting contracts maintained by buyers and sellers. For example, if there are 100 long contracts for Bitcoin and 50 short contracts on the Ethereum on the stock exchange, open interest would be 150.
Why are open interest important for future negotiations?
Open interest plays a key role in future trade, because it helps traders assess the feeling and liquidity of the market. Here are some implications of open interest in Futures trade:
- liquidity : High open interest indicates strong demand and market liquidity, making it easier to enter and leave the position quickly and efficiently.
- Familiar on the market
: Open interest may indicate whether the market is excessive or survive, providing traders with valuable information about the feeling of the market and potential price movements.
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increase in cryptocurrency of open interest
In recent years, the growth of cryptocurrency trading has led to a significant increase in open interest in various markets, including options for term and bitcoins. When more investors enter the market, the demand for specific cryptocurrencies, such as Bitcoin (BTC), increases, increasing the level of open interests. This caused higher prices of these contracts, because the sellers are ready to ensure liquidity to meet buyers.
noteworthy examples of high open interest
Some unusual examples of high open interest emphasized the importance of this record:
- Bitcoin Futures : Until 2020, the Bitcoin contract agreement had about 150 million open items, with an average size of USD 10-15 per contract.
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Challenges and restrictions
Although open interest is a powerful tool for traders and investors, it also has its limitations:
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- Stunt Flucies : Seasonal fluctuations in open interest may affect negotiations strategies because some periods may have a lower level of open interests.
Application
Open interest is a critical indicator of traders and investors who want to navigate the cryptocurrency market. By monitoring this indicator, traders can get valuable information on market moods, liquidity and risk management. Because the cryptocurrency market is constantly developing, open interest will remain an indispensable tool for those who try to use their potential.
Recommendations
For Futures traders:
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For investors:
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