Bitcoin (BTC) Market Shows Bullish Potential as Open Interest Hits 2-Month Low

The crypto market shows encouraging signs as open interest in bitcoin hits its lowest level in two months, suggesting a decrease in selling pressure.

The crypto market is showing encouraging signs. Open interest in bitcoin has hit its lowest level in two months, indicating a decrease in selling pressure. This development comes as BTC has been fluctuating around $95,000 since late December 2024.

Bearish traders are retreating in the face of BTC’s resilience

On December 28, the bitcoin market experienced massive liquidations, with long positions being liquidated to the tune of $470 million.

Open interest on futures contracts has dropped by 11% since peaking on December 20, falling from 668,100 BTC to 595,700 BTC. This decrease in bearish trader activity suggests limited confidence in their ability to push prices lower.

The futures contracts premium is reflecting this dynamic, with a rapid rebound above 10% after briefly touching 9.5% at the end of December. More revealingly, this premium is now at 15%, signaling renewed confidence from bullish investors. This premium hit its highest level on December 20.

The funding rate for perpetual futures contracts, a key indicator of retail trader sentiment, remains at 1.3% monthly, its highest level in over two weeks. This funding rate still remains in a zone considered neutral.

U.S. budget impasse boosts bitcoin’s safe-haven appeal

A warning from Janet Yellen regarding the ceiling of the U.S. debt, which could be reached as early as January 14, is creating a favorable context for bitcoin.

The political deadlock surrounding the increase in the debt ceiling, fueled by the opposition from some Republicans, is boosting bitcoin’s appeal as a safe haven.

The growing presence of bitcoin ETFs, which now hold $105 billion in assets under management, is helping to establish crypto as a credible alternative to traditional assets during periods of economic uncertainty. This institutionalization of the market is contributing to greater stability, despite short-term volatility.

In conclusion, the current market configuration—with bearish positions largely disengaged at levels below $95,000 and technical indicators pointing to bullish potential—suggests a promising outlook for bitcoin. U.S. political uncertainty is also paradoxically strengthening its status as a safe-haven asset.

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