Bitcoin Open Interest Rises After Fed's Dovish Minutes

August 22, 2024 05:56 PM AEST | By Team Kalkine Media

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Bitcoin Open Interest Rises After Fed's Dovish Minutes — Image source: Shutterstock

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Federal Reserve's July meeting minutes, Bitcoin futures open interest (OI) surged, highlighting increased market activity and mixed sentiment among traders.

Bitcoin futures OI reached $31.92 billion, marking a notable rise of $1.26 billion within just 12 hours. OI represents the total number of unsettled derivative contracts, such as options and futures, and a rising OI generally reflects growing trader confidence regarding Bitcoin’s price direction.

Despite this increase in OI, the sentiment among Bitcoin(BTC) futures traders is split. According to CoinGlass data, long positions slightly outnumber short positions, with 50.63% of total futures positions being long and 49.37% being short. Bitcoin’s price has remained relatively stable around $60,623 since August 9, according to CoinMarketCap data.

Markus Thielen, head of research at 10x Research, noted that the Fed’s meeting minutes suggest a near-certainty of a rate cut in September. Thielen highlighted that a significant majority of Federal Open Market Committee (FOMC) members supported the idea of a rate cut in September, with some even considering a July cut as feasible.

The dovish tone of the Fed's minutes has led some market observers to speculate that Bitcoin might be poised for an upward breakout. Pseudonymous crypto trader Psychedelic indicated that Bitcoin appears ready to rise, attributing this potential to the Fed’s recent statements.

Historically, when the Fed lowers interest rates, investors often shift away from safer assets like bonds and term deposits, favoring higher-risk assets such as Bitcoin. Crypto commentator Nishant Bhardwaj anticipates a highly active fourth quarter for both U.S. and Indian markets, suggesting that a potential rate cut could drive significant movements in Bitcoin and broader markets.

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