Data shows that Bitcoin’s open interest has dropped as BTC breaches the $60,000 barrier, suggesting that major liquidations have taken place.

Bitcoin Open Interest Has Dropped As Shorts Undergo Squeeze

In a new post on X, CryptoQuant Head of Research Julio Moreno discussed the latest trend developing in Bitcoin Open Interest. The “Open Interest” here refers to an indicator that tracks the total number of BTC-related derivatives positions that are currently open across all exchanges.

When the value of this metric goes up, it means that investors are currently opening new positions in the market. Since the total leverage in the sector tends to increase when new positions are created, this trend can lead to more volatility in the asset’s price.

On the other hand, the indicator that registers a decline implies that the holders are closing positions on their own initiative or they are being liquidated by their platform. In general, the price becomes more stable after such a trend due to the decreased leverage.

Below is a chart showing the trend in Bitcoin Open Interest over the past week:

The value of the metric appears to have gone through a steep drawdown in recent days | Source: @jjcmoreno on X

In the chart, Bitcoin Open Interest is BTC-denominated, rather than USD-denominated as is normally the case. The advantage of it being denominated in BTC is that its value is not distorted by changes in the coin’s price.

The chart shows that the indicator had seen a sharp drop a few days ago as the asset had gone through a crash. This crash caused a large amount of long liquidation, resulting in the decline of the metric value.

Over the past 24 hours, the opposite seems to have happened, as a sharp rally has instead caused a high number of short liquidations in the market. Naturally, this has caused Open Interest to fall again.

Data from CoinGlass shows the exact numbers of the latest Bitcoin short squeeze.

The liquidations that have occurred during the last 24 hours for each symbol | Source: CoinGlass

As seen above, over $94 million worth of Bitcoin-related contracts were liquidated in the past day. That’s nearly double what second-place Ethereum (ETH) liquidated (just under $53 million).

The entire cryptocurrency derivatives sector has seen liquidations of $212 million in this window. Shorts have offset most of this flush with $137 million in liquidations.

The data for the total market liquidations | Source: CoinGlass

Given the massive size of the short squeeze, it is likely that the surge in Bitcoin price was partly driven by this series of liquidations.

BTC price

At the time of writing, Bitcoin’s price is hovering around $60,300, down about 8% over the past seven days.

Looks like the price of the asset has gone through recovery recently | Source: BTCUSD on TradingView

Main image from Dall-E, CoinGlass.com, chart from TradingView.com