Bitcoin Futures Traders Still Optimistic

Photo: Coin Telegraph

Bitcoin price recovered by 27% just three days after testing the $31,000 support and earlier today bull recaptured the $40,000 level.

This quick recovery occurred despite the digital asset facing one of the largest buy-side liquidations in a single day as $1.5 billion was wiped off the books. Interestingly, futures contract traders appear to have returned with an even larger appetite.

After such a large liquidation event, an increased appetite from futures traders is somewhat unexpected but professional investors are skilled at hedging their positions and executing complicated strategies involving options.

To measure the impact of the recent liquidations and better understand how these futures traders have been positioned, one should start by analyzing the open interest.

Large reductions in this indicator could show that traders were caught by surprise and currently unwilling to add positions.

BTC futures aggregate open interest. Source: Bybt.com

As the above data indicates, BTC futures open interest reached a $13 billion all-time-high on Jan 14, a 74% increase from the previous month.

For those unfamiliar with futures contracts, buyers and sellers are matched at all times. Every long contract is betting on further upside and has been traded against one or more entities willing to short it.

Read more from the original article here.