Open interest in Bitcoin futures has been progressively recovering in the past few days following a sharp drop on October 10 that pushed OI (in BTC) from 741,500 to 624,4000 – a 16% single-day drop.
However, these levels have not been seen since May this year, back when BTC traded at $103,000 and the bull market was just getting started. Hence, traders don’t seem to be ready to jump back into the market just yet.
That said, negative net inflows from Bitcoin exchange-traded funds (ETFs) decelerated yesterday to $40 million but have still finished the day in red territory for four sessions in a row, further confirming that investors are cautiously reducing their positions.
During this period, more than $1 billion has been taken out of BTC-linked vehicles. Although this sounds like a lot, it is nothing when expressed as a percentage of the $61 billion that these funds still manage.
For now, the evidence is not there to support that this could be the beginning of a bear market. In contrast, historical trends suggest that Bitcoin could bounce strongly off this level as extremely negative market sentiment tends to be a contrarian indicator.
Weekly Trend Favors Bullish Outlook for Bitcoin
The weekly chart for BTC shows that the top crypto is nearing a key support at the 50-week simple moving average (SMA). When such a move is paired with a low reading in the Fear and Greed Index, Bitcoin has bounced strongly to make a higher high just a few weeks later.
