Bitcoin may be close to bottoming out in ongoing correction, according to this metric
In a recent tweet, cryptocurrency-focused analytics firm IntoTheBlock noted that a potential Bitcoin short squeeze could be underway.
His analysis is based on the ratio of Bitcoin’s open interest to the flagship cryptocurrency’s market capitalization, which recently hit a year-to-date high of around 2.25%.
Open interest on Bitcoin futures, which represents all open contracts held by traders, recently hit a new high of $16.68 billion, according to data provided by Coinglass, crypto giant Binance representing 28.86% of the sum. FTX and CME Group occupy the second and third places (respectively 17.65% and 14.06%).
IntoTheBlock recalls that the OI/MC ratio also rose amid falling Bitcoin prices in July 2021, the month Bitcoin plunged to $29,400 before resuming its uptrend.
Therefore, the analytics company expects a similar scenario to unfold this time around.
Potential short squeeze ahead
The report of #Bitcoinsopen interest relative to its market cap hit its highest level in more than a year
The last time the OI/MC ratio rose as the price of Bitcoin fell was in July 2021, which marked the bottom pic.twitter.com/Jgkr2L4m5A
— IntoTheBlock (@intotheblock) January 8, 2022
Bitcoin is now on track to register its third consecutive month in the red, with its price dropping 10% in July. It is currently changing hands at $41,502 on major exchanges.
Extreme fear and oversold conditions
On January 7, the Relative Strength Index (RSI) on Bitcoin’s daily chart fell below 30 for the first time since May 17, indicating that the largest cryptocurrency is oversold.
On January 8, a widely followed “fear and greed” Bitcoin index dropped to 10.
The bulls may not be out of the woods yet. As reported by U.Today, Galaxy Digital CEO Mike Novogratz recently predicted that the price of the biggest cryptocurrency could end up reaching $38,000, which is the lower range of a support zone. major.
