Bitcoin: open interest may lead to a bearish correction

Bitcoin continues to rise in Wednesday's trading, hitting a nearly three-month high, but an indicator such asopen interest, signals the threat of a bearish correction.

Just a few hours ago, Bitcoin committedanother important breakthrough, breaking the integrity of the $ 9,400 mark and marking the highs of early November. Adding 5%, cryptocurrency rises in price for the fourth day in a row.

On the daily charts during the weekgolden cross figure. This bullish trend reversal signal is generated when a faster 50-day moving average crosses a 200-day moving average from the bottom up. The last time this phenomenon was observed in April last year, before the start of a large-scale rally.

Open interest approaches $ 1 billion

But in fact, everything is not so rosy - somesignals warn of the threat of a rebound. Open interest is the sum of open positions on bitcoin derivatives such as options or futures.

Now, open interest at the BitMEX site is approaching $ 1 billion, from where the rollback traditionally takes place.

Many analysts say that this time it is worth waiting for a correction.

When open interest on BitMex crosses the $ 1 billion frontier, Bitcoin pulls back. This does not mean that a correction is inevitable, but you should still pay attention to this signal.

In case of correction, quotes may retreat toarea of ​​$ 8,500, but may go further. Some traders are talking about a 40% correction that could send BTC to lows in the $ 5,500 area. However, the longer Bitcoin stays near current levels, the lower the likelihood of such a scenario.

Well-known trader and analyst Josh Rager notes:

On longer-term charts, bitcoin is obviouslybroke a bearish trend, and if the price goes above $ 9557, a rising maximum will be formed. Of course, the price may roll back, but it's too early to talk about reaching $ 5,000, at least while BTC is above $ 8,000.

 

Good start

Since the beginning of the year, bitcoin has risen in price by almost 30%. Thus, this is one of the most successful January in the history of cryptocurrency.

Token growth is primarily due to events onthe world stage, including geopolitical tensions in the Middle East, as well as pressure on stock markets and fiat currencies amid the outbreak of a new Chinese virus. In addition, BTC receives support on expectations of a halving.

Any potential correction is likely to be insignificant and entail a renewal of the bullish momentum.

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