Bitcoin Unfilled Contracts Skyrocket to Highest Level Since August Sell-off, BTC Price Envisions $26,000
Bitcoin (BTC) has dropped nearly 3% in the past 24 hours and almost 5% in the past three days, causing it to lose a crucial support level at $27,260.
With the Relative Strength Index (RSI) significantly falling below the 50 level, Bitcoin may continue to decline, as confirmed by the Awesome Oscillator (AO). The AO indicator shows a gradual tilt towards the centerline and a significant presence of red histogram bars.
The increasing selling pressure could push Bitcoin's price towards the range of $25,887 to $25,140. A break below and closing below the midpoint of that range at $25,499 would confirm the downward trend, potentially pushing BTC down to the low range of $24,800.
BTC/USDT 1-day chart, source: TradingView.
Meanwhile, Bitcoin's open interest has reached its highest level since the sell-off on August 18, amounting to $12.37 billion. Open interest typically represents the total number of open positions (both long and short) for a specific asset in the market.
In this case, a surge in open interest during a price decline suggests more traders holding short positions compared to long positions. Conversely, an increase in open interest during an uptrend indicates more traders holding long positions compared to short positions. The sharp rise in open interest during Bitcoin's recent drop indicates a preference for short positions among investors.
Analysts suggest that a squeeze sell-off may be imminent. In simple terms, a squeeze sell-off refers to rapid price changes due to forced liquidation. In this scenario, a squeeze of long positions can cause a sudden price drop, scaring long traders who then panic-sell their holdings.
Bitcoin Open Interest Contracts, source: Coinglass.
On the other hand, if cautious investors intervene, the Bitcoin price could recover above the key support level at $27,260 or extend towards the psychologically significant zone of $28,000 in a highly bullish scenario.
If buying activity increases above that range, BTC may break through $28,731 and reclaim the high of August 17. It is important to note that for an upward trend to be confirmed, Bitcoin must surpass the range of $29,177 to $29,770.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
