Bitcoin open interest recovers 13% as an option forward
Bitcoin futures open interest (OI) — a measure of initial market participation — has risen nearly 13% since the start of the year, which analysts say may reflect more risk appetite for the crypto.
The increase follows a significant carryover period from October to December, when Bitcoin derivatives exposure fell with a broader market correction.
Bitcoin Futures OI has fallen 17.5% to 314,000 BTC from 381,000 BTC in the last three months, following a roughly 36% price correction since the beginning of October, “reflecting a phase of risk reduction and leveraged positions,” CryptoQuant analyst “Darkfost” said on Monday.
However, a recovery may be in motion in Bitcoin futures OIO, Darkfost said. According to data from Coinglass, it gained more than $61 billion on January 19 from an eight-month low of $54 billion on January 1.
An eight-week high of $66 billion was recorded on January 15.
“Currently, open demand is showing signs of gradual recovery, indicating a gradual return of appetite,” the analyst said.
“If this trend continues and strengthens, it could further support the bullish momentum, although the correction is currently relatively modest.”
OI measures the number of open and unexpired crypto derivatives contracts or notional value, or in other words, how many active bets exist in the market at any given time.
As it rises, more traders enter profits, which indicates an increase in confidence and risk-taking, while a fall in OI indicates that traders reduce exposure and risk.
Solving is also good for marketing.
Zoom shows OIA futures are still down 33 percent from their peak of $92 billion in early October.
This is also an “extinguishing signal” which usually refers to significant low signals, “effectively restarting the market and creating a solid basis for recovery,” the analyst said last week.
Related: Bitcoin open interest falls 30%, setting up bullish recovery: analyst
Bitcoin options open interest is higher than futures
Coin Bureau co-founder and CEO Nick Pukrin observed on Sunday that Bitcoin options OI overturned futures OI last week.
Futures are a direct bet on the price direction of Bitcoin. Traders are obliged to buy or sell at a certain settlement price and date and if the price rises against them, they will be rejected.
Options offer the right, not the obligation, to buy or sell at the strike price without binding liquidation, which is better for dampening volatility and weakening overall market stability.
According to Checkchain data, the total OI of Bitcoin options across all exchanges stands at $75 billion, while futures OI is at $61 billion at the national rate.
“This means that big money is building places that will fix the cost of buildings and outdated mechanics. It's not just bet up or down,” Pukrin said.
“Fewer liquidity cascades, more sticky levels, and more retail preoccupations at key prices. The BTC market looks less like a casino and more like a structured financial system.”
Options OI is currently one of the industry's largest exchanges with a maximum strike price of $100,000 and $2 billion per debit.
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