Bitcoin’s derivatives market is flashing renewed bullish signals, though not without growing risks. According to new analysis from CryptoQuant, open interest in Bitcoin futures remains elevated at $42 billion, just below the historic high of $43 billion.
This persistent activity reflects a high number of active long and short contracts, underscoring heightened investor engagement.
Alongside this, funding rates are showing a steady upward trend. These rates paid between long and short traders to balance differences between futures and spot prices indicate that long positions are currently dominant. This pattern often signals a market leaning bullish, as traders are willing to pay a premium to maintain upward exposure.
However, the combination of high open interest and rising funding rates can be a double-edged sword. While it demonstrates optimism, it also points to potential overheating. The growing appetite for leverage during bullish periods increases the likelihood of sharp corrections. In such conditions, sudden price swings could trigger a cascade of liquidations, forcing exchanges to close vulnerable positions, particularly when funding fees become excessively high.
Despite these risks, broader sentiment remains cautiously positive. Analyst CrediBull Crypto observed that during the recent period of sideways price movement, over $10 billion in spot Bitcoin was sold. Yet, open interest dropped by 20% and funding rates stayed neutral.
This shift from a derivatives-led rally to one driven by spot buying is viewed as a healthier market foundation and a possible precursor to a stronger bullish breakout. He further noted, “Overall all very positive/healthy signs. We are going much higher before this is over imo.”
Adding to the market intrigue, CryptoQuant also highlighted an unusual on-chain event: two long-dormant Bitcoin wallets transferred 8,000 BTC. This represents one of the largest movements of idle coins in recent months and could signal strategic repositioning by early holders. According to CryptoQuant contributor Mignolet, the wallets had been inactive for over six years and were initially associated with Xapo Bank.
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