Bitcoin (BTC) volatility has hit an all-time low, coming on the back of an extremely bored market, possibly due to the lack of proper impulse or catal
To explain leveraged bets for the layperson, the longs have let the shorts use debts to increase their buying power, which is expected to fuel a price surge because of increased demand. Short traders are expected to buy more BTC for speculation with the additional funds.
If it plays out as the longs have planned it, then this group of traders has potential returns coming their way because their take profits could soon be triggered, and their pockets will be filled in the selloff. On the other hand, short traders face unparalleled risks if the narrative plays in favor of long traders. This is because their positions could soon transform into outsized losses when Bitcoin price rises. To make matters worse, they would still need to return the $200 million debt, with possible interest and transaction fees, among other expenses.
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
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