Bitcoin open interest rise to $35B triggers overheating concerns

Bitcoin's (CRYPTO:BTC) open futures contracts have surged past $35 billion, raising concerns among analysts about potential market froth.

According to a report from Bitfinex, Bitcoin open interest (OI) reached $35.52 billion on September 27, a level historically associated with local price peaks.

Open interest represents the total number of Bitcoin futures contracts that have not been settled or expired and is a key metric used to gauge market sentiment and predict future price movements.

"BTC open interest has surged, exceeding $35 billion, a level that has historically correlated with local price peaks," said Bitfinex analysts in their October 1 report.

Data from CoinGlass shows that the last time Bitcoin OI reached these levels was in June, when Bitcoin traded near its all-time high of $70,759.

Following that peak, Bitcoin's price dropped nearly 18% over the next 30 days.

This pattern has raised concerns about potential market overheating.

Since the peak on September 27, Bitcoin's open interest has decreased by around 9%, falling to $32.32 billion.

The price of Bitcoin has also seen a dip, currently trading at approximately $61,629, down 4.36% over the past week.

The price drop coincided with rising geopolitical tensions in the Middle East, which has added further uncertainty to the market.

Despite the pullback, Bitfinex analysts suggest the overall bullish momentum remains intact.

"A modest 5-10 percent pullback could reset OI without disrupting the overall uptrend," the analysts noted.

According to QCP Capital, escalating tensions in the Middle East could potentially push Bitcoin lower, with a possible decline to $55,000 if the situation worsens.

At press time, the Bitcoin price was $61,000.98.