Bitcoin’s price has been volatile in recent days, with bulls currently in control pushing the price above $60,000. However, weekends typically see lower trading volumes, impacting market depth. Lower liquidity during weekends can lead to more significant price movements. For instance, in the past, BTC dropped from above $62,000 to below $57,000 during a weekend. Monitoring trading volume and liquidity levels during the upcoming weekend can give clues about potential price movements.
Bitcoin’s Funding Rates
Another important metric to consider is Bitcoin’s funding rates in the derivatives market. Funding rates indicate the aggressiveness of buyers and sellers in executing orders. Recently, funding rates dropped to almost zero after Bitcoin’s price fell below $60,000, signaling a possible bounce back. With funding rates turning negative on some exchanges, there is a potential for increased volatility in the coming days, especially with rising trading volumes.
Bitcoin’s Open Interest
Open interest, which represents the total sum of all open positions in the derivatives market, regardless of their direction, is also a crucial metric to monitor. High or increasing open interest typically precedes volatility. In the past 24 hours, there has been a 1.7% increase in perpetual contracts OI and a 0.2% increase in futures contracts. A higher open interest combined with lower trading volume during the weekend could make it easier to influence the market with less effort. Keeping an eye on Bitcoin’s open interest during the weekend can provide insights into potential price movements.
Traders and investors should pay attention to trading volume, market depth, funding rates, and open interest during the weekend to anticipate Bitcoin’s price movements accurately. Lower trading volumes and higher market liquidity during weekends can lead to more significant price swings. Monitoring funding rates can help gauge the behavior of buyers and sellers, indicating potential market shifts. Similarly, tracking Bitcoin’s open interest can provide valuable insights into future volatility. By staying informed and analyzing these metrics, traders can better position themselves to capitalize on opportunities and avoid surprises in Bitcoin’s price movements.