Bitcoin is getting close to an important price range that analysts say will be its first real test of resistance.
On the start of the week the cryptocurrency surpassed $69,500, breaking through a level not seen since late July.
Political tailwind?
Even with this optimistic momentum, there’s growing chatter in the futures market as open interest rises to new heights.
While higher open interest is often seen as a bullish sign, it could also lead to sharp corrections if Bitcoin’s movements don’t match what traders expect, and sharp correction here means big drop.
A new Bitfinex report highlights that market participants are speculating about a link between Bitcoin’s price and Trump’s chances in the upcoming U.S. presidential election.
Analysts suggest that Bitcoin’s rallies seem closely tied to Trump’s winning odds, and the excitement around his potential victory may have fueled recent price increases.
This is likely nothing but speculation, but it still picked up since Trump announced possible reforms within the Securities and Exchange Commission and tax policies that could benefit crypto investors.
As analysts pointed out, there’s a visible interaction between political events and crypto prices, and this is a prime example for it.
Longer the struggle, bigger the breakout?
At the time of writing, Bitcoin was trading at around $67,500, just a few thousand dollars shy of the critical $70,000 level.
If spot market interest remains strong, especially with macroeconomic factors like the election outcome, it could lead to a breakout from Bitcoin’s eight-month consolidation phase.
On the flip side, weak demand could result in another rejection at these high levels.
No all-in
As Bitcoin tests its resistance level, global open interest, the OI for perpetual and futures trading pairs surged to new highs, recently hitting $40.38 billion.
This increase signals heightened speculation in the futures market, and crazy speculation is never good, not on this level.
While rising open interest is usually viewed as a positive sign of investor confidence, Bitfinex analysts warn that it could complicate Bitcoin’s price dynamics, simply put, crushing the market.
Traders are already start to positioning themselves ahead of potential market shifts, which could lead to increased volatility and sharp drops.
