Bitcoin Holds $20,000, But Analysts Say BTC's Open Interest Leaves Room For "More Deleveraging"

BTC is trading at the low end of its 76-day range, but analysts say future Fed actions and interest open record increase the possibility of future "deleveraging events".

Market Update

Bitcoin (BTC) price continues to struggle at $20,000 and repeated dips below this level have led some analysts to predict a bigger decline in the near term. Earlier in the week, independent market analyst Philip Swift tweeted that the Crypto Fear and Greed Index fell back to back at “Extreme Fear,” reflecting softening sentiment among investors.

The market is not taking advantage of $BTC which is hanging around $20,000. Throwback to Extreme Fear today.

Live Graphic: https://t.co/Jr5151zN7I pic.twitter.com/UnztrZP7FP

— Philip Swift (@PositiveCrypto) August 31, 2022

On August 29, analytics firm Delphi Digital highlighted that open interest in Bitcoin hit a new all-time high and said:

“The futures open interest leverage ratio for BTC reached an all-time high at more than 3% of BTC’s market capitalization, following the market crash on August 26.”

According to Delphi Digital, "Higher values ​​suggest that open interest is large relative to the size of the market. This implies a higher risk of market tightening, liquidation cascades or delivery events. »

Bitcoin Open Interest. Source: Delphi Digital

Exactly what could catalyze such an event remains unknown, but any continuation of the current bearish trend in equities that saw the Dow Jones and S&P 500 conclude a fourth day downside to end August at a loss may continue to weigh on the price of Bitcoin. CNBC data shows...