Bitcoin broke its all-time highs again, reaching a new peak at $79,780. This is the fourth time in just five days that Bitcoin has hit a record high, firmly establishing a bullish phase that began when it broke its all-time high in March. Market optimism rose after Donald Trump’s recent victory in the US elections, adding momentum to Bitcoin’s rally.
Adding to the bullish sentiment, data from IntoTheBlock shows a notable development in open interest in BTC for perpetual swaps, with its ratio to market cap reaching a multi-year high. This measure often indicates increased interest in the market and potential future volatility as traders increase leverage to make gains in the current trend.
The next few days will be crucial as investors monitor momentum and assess the potential for further upward movement. If Bitcoin maintains its position above these levels, the bull market could intensify, which could attract more institutional and retail interest in the asset.
Bitcoin’s bullish phase has been confirmed
Bitcoin has entered a confirmed bullish phase, supported by both price action and compelling on-chain data. IntoTheBlock was recently reported Open interest in perpetual swaps has reached the highest ratio to market cap since the FTX collapse. This rise highlights traders’ keen interest in Bitcoin derivatives as participants increasingly speculate on Bitcoin price movements through leveraged positions.
A high open interest to market cap ratio can often indicate increased market expectations for large price movements. In the case of Bitcoin, this rise in derivatives trading indicates that traders are anticipating significant volatility, either up or down. The inflated leverage associated with high open interest means that even small price changes can result in large gains or losses for these traders, increasing Bitcoin’s short-term volatility.
If the price continues to rise in line with trader expectations, this high open interest can drive a strong upward movement as leveraged positions gain momentum. However, this scenario comes with risks: if Bitcoin reverses its trend, many leveraged positions may face liquidation.
This would force traders to close their positions at a loss, potentially triggering a series of liquidations that could temporarily cause the price to fall sharply. As a result, the coming weeks could bring significant gains and increased volatility as Bitcoin’s bullish phase emerges.
BTC test price discovery
Bitcoin is up more than 19% since Monday and is on track to achieve its highest weekly close ever. Price action has confirmed the uptrend after consistently breaking all-time highs four times in the past five days, indicating strong momentum. BTC now looks too strong to correct significantly in the near term. However, with increasing speculation and highly leveraged trades entering the market, volatility may intensify in the coming days.
A decline to the $73,800 level would maintain the bullish structure. This price point represents a major resistance level that was recently broken and can now act as strong support. If Bitcoin can hold above this level after a bounce, it will solidify the uptrend and provide the necessary fuel for further upside.
While the upward momentum is undeniable, an increase in speculative activity and leverage can lead to sharp price fluctuations. If the market faces a pullback, it will be important to see whether key support levels like $73,800 hold or not. This would confirm that the trend is healthy and allow Bitcoin to continue its upward trajectory without losing too much ground.
Featured image by Dall-E, chart from TradingView