Bitcoin Interest Peaks at $80B Amidst Price Drop Below $111K

Key Points

• Bitcoin’s Open Interest (OI) hit a record high of $80 billion on May 22nd.
• Despite this record, Bitcoin’s price briefly slipped below $111K, sparking concerns of a potential cool-off or increased volatility.

Bitcoin’s speculative activity has seen a significant increase, with Open Interest (OI) reaching a record $80 billion on May 22nd.

This is an increase of $10 billion from the previous OI peak in late 2024. However, unlike the previous peak, there is no excessive market froth yet.

Market Anticipates Further Run

Despite the record OI spike, the price of Bitcoin briefly dipped below $111K on Thursday. This led to fears of a potential cool-off or increased volatility.

According to the liquidation map platform Kingfisher, there is a risk of a brief cool-off. There is a concentrated leveraged bull in the $108K-$109K area, and down to $104K, compared to shorts positions above $111K.

In the event of a liquidity-driven flush out, the above set-up suggests a slight dip may not be out of the question. At the time of writing, Bitcoin had tagged the $108K mark.

However, any brief dip may serve as a springboard for a further rally, based on muted readings from key overheated market indicators.

Switzerland-based trading firm Swissblock noted that the current realized profit (around $3 billion) was significantly lower than the peak in December ($10 billion). The firm stated, “Bitcoin just hit a new ATH, and selling pressure is nowhere to be found. No big profit-taking, no panic. Bitcoin may have more room to run.”

Alphractal’s João Wedson echoed this sentiment, stating that the past Bitcoin top was flagged when the Bitcoin ETF Fund index hit a record high. This has not yet occurred despite the new ATH price for Bitcoin, leading him to conclude, “There is still room for growth before a potential extreme euphoria in this segment.”

Potential for Extended Correction

On the weekly charts, Bitcoin is about 10% away from hitting the multi-year trendline resistance. In 2023, 2024, and 2025, Bitcoin faced rejection at this level.

If history repeats itself, Bitcoin may face another extended correction only after reaching this hurdle, which could range anywhere from $118K to +$130K.

In conclusion, Bitcoin may cool off slightly to shake out late longs between $104K-$108K. However, key indicators suggest the asset has the potential to push higher.