The Bitcoin and wider cryptocurrency markets surprised observers yesterday as the market capitalisation of leading cryptos suddenly increased. January 14 started with the market at $217.5 billion, today that figure stands at over $238.8 billion.The heightened market volatility appears to have attracted other traders to the market. Open interest in Bitcoin futures, for example, has soared to $3.5 million.Does Rising Open Interest Hint of More Upside in Bitcoin?Even for the cryptocurrency markets, yesterday was a bit of an anomaly. Across the board, digital assets went up. Standout performances came from the likes of Bitcoin SV, Dash, and Ethereum Classic.As well as buying pressure increasing, so too is interest in Bitcoin futures. Cryptocurrency market analysis firm Skew highlighted the growth in open interest across all exchanges offering the Bitcoin derivative products.Open interest refers to the total number of outstanding, or unsettled, contracts. Open interest rises as new contracts are created and it falls as contracts are settled. It gives a much clearer picture of the amount of money actually entering or leaving a market than trade volume does.Global open Interest ticked up 15% to $3.5bln pic.twitter.com/4a4i9wlyY0— skew (@skewdotcom) January 15, 2020Already rising at the end of December, January has seen the total value of open futures contracts surge to $3.5 billion. Over the last day or so, traders created more than $500 million worth of futures contracts.More BTC Gains to Come?Whilst not an indicator of price direction alone, traders often use open interest to determine the strength of a trend. Open interest increasing at a time when the market is trending upwards often signals a continuation of a rally. Similarly, rising open interest during a downwards or sideways trend also indicates more of the same.The following graphic illustrates what traders can glean from open interest figures. When price, volume, and open interest all increase together, the price of Bitcoin is likely to continue climbing with strength. Volume and open interest declining whilst price is rising is a sign of a rally weakening and a potential trend change.Meanwhile, the opposite also holds true. When price trends down with volume and open interest rising, the bearish action is likely to continue. Price, volume, and open interest all in declining together indicates the downtrend is running out of steam.pic.twitter.com/YOKIlFmSy6— Murad Mahmudov 🚀 (@MustStopMurad) January 12, 2020Judging by the above interpretations, Bitcoin’s price rally looks set to continue. As noted above, open interest and price are certainly rising at the moment. Similarly, in Skew’s tweet from today, the daily volume of Bitcoin futures is also increasing. Bitcoin could, therefore, be looking at further upside before any correction takes place. Related Reading: Crypto Content Missing from YouTube; Is Platform’s Purge Back On?Featured Image from Shutterstock.
This post was originally published on www.newsbtc.com