Bitcoin’s price has been experiencing fluctuations in the past few days, with bulls currently having the upper hand as they push BTC past the $60K mark towards $61,000. However, weekends bring a different dynamic to the market. Traditionally, weekends see lower trading volume compared to weekdays, leading to increased volatility. With less liquidity available in the market, price movements can be more significant. For instance, just weeks ago, Bitcoin’s price dropped from over $62,000 to below $57,000 during the weekend. As we monitor the 24-hour trading volume, which currently stands at around $25 billion, any changes in this metric over the weekend could signal important shifts in price action.
Funding rates in the derivatives market provide insights into the aggressiveness of buyers and sellers in executing their orders. While funding rates impact the derivatives market directly, they also have an indirect effect on spot prices. Recently, as Bitcoin’s price dropped below $60K, funding rates decreased to nearly zero. This indicated a potential bounce back, which materialized the following day as the cryptocurrency surged past $61,000. Presently, some crypto exchanges are even showing negative funding rates, pointing towards the possibility of heightened volatility in the days ahead, especially with increased trading volumes.
Open interest, a key metric in the derivatives market, represents the total sum of all open positions, regardless of their long or short nature. High or rising open interest often precedes increased volatility in the market. Over the past 24 hours, there has been a 1.7% rise in perpetual contracts open interest and a 0.2% increase in futures contracts. Heading into the weekend with substantial open interest, combined with lower trading volume and overall market liquidity, could make it easier for market movements to occur with less resistance. Keeping an eye on open interest can provide valuable insights into potential larger price swings in the days ahead.
As Bitcoin’s price continues its upward momentum, there are several key factors to consider over the weekend that could influence its performance. Monitoring trading volume, funding rates, and open interest can provide valuable information on potential price movements and help traders anticipate and capitalize on opportunities in the market. Be prepared for increased volatility, thinner liquidity, and the possibility of significant shifts in Bitcoin’s price action over the weekend.