February 12, 2024 – Bitcoin’s recent price movement has sparked a wave of optimism among investors, as the cryptocurrency’s open interest hit a staggering $22 billion, a level not seen since April 2021. This upswing in investor commitment could be a precursor to a significant price increase for Bitcoin.

Unprecedented Open Interest Since ETF Approval

Following the approval of a spot ETF on January 11, public interest in Bitcoin has surged, with many institutions allocating substantial portions of their portfolios to Bitcoin. This has culminated in the total capital stock in BTC futures markets surpassing previous highs, hinting at a potential uptrend in Bitcoin’s price.

A Closer Look at the Numbers

As of February 12, Bitcoin’s open interest has crossed the $21.8 billion mark, a 25% increase within the first 12 days of the month. This growth has outpaced the spot price increase, which saw a 15% rise over the same period. Such a discrepancy between open interest and spot price growth could indicate a bullish market sentiment, suggesting that traders are eager to capitalize on the current bullish trend.

The Bullish Case for Bitcoin

With the open interest in Bitcoin derivatives reaching heights parallel to when spot prices were well over $50,000, the market may be undervaluing Bitcoin at its current trading price of $47,800. This sets the stage for a bullish run towards the $50,000 mark, despite the resistance faced at the $48,900 level.

Investor Behavior and Market Resistance

Investor analysis from IntoTheBlock suggests that a significant number of addresses acquired Bitcoin at just above the $48,900 mark. These investors, who have been at a loss for nearly three years, are likely to sell as prices near their break-even point, creating a resistance level that bulls need to overcome to reach the coveted $50,000 target.

The Bears and the Support Buy-Wall

On the bearish side of the fence, a major price dip below $40,000 seems improbable given the strong support buy-wall at $42,000. This is where a substantial number of addresses that acquired Bitcoin at an average price of $42,047 are likely to step in with covering purchases to prevent a move into a loss-making position.