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Bitcoin Breakout Above $31K Elusive as Shorts Pile In
Bitcoin has failed twice this week to scale the $31,000 mark, with open interest in stablecoin-margined futures rising on both occasions.
Updated Jul 13, 2023, 3:00 p.m. Published Jul 13, 2023, 7:18 a.m.
Bitcoin has failed twice this week to establish a foothold above $31,000. Data from Coinalyze shows futures traders are likely responsible for keeping the gains under check.
The first failed attempt on Monday at 20:05 UTC saw prices clock a high of $31,040 before quickly retreating back to $20,200 by 21:55 UTC. Open interest or the number of active stablecoin-margined (or linear) futures contracts tied to bitcoin rose from roughly 230,000 BTC to 242,000 BTC as prices pulled back from $31,040.
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A rise in open interest alongside a decline in price is said to indicate an influx of bearish short positions in the market. Futures short positions are leveraged bets that profit from a decline in the underlying asset's price.
"Price action suggested shorts piling in as we approached $31,000," crypto liquidity network Paradigm said in a market update published Tuesday, drawing attention to the uptick in open interest as prices turned lower from $31,040.
A similar pattern was seen on Wednesday following the release of the softer-than-expected U.S. consumer price index (CPI) report that weakened the case for continued monetary tightening by the Federal Reserve.
Bitcoin printed a high of $31,000 immediately after the U.S. Labor Department released the CPI at 12:30 UTC only to fall back to $30,500 in the next one hour.
The retreat was once again accompanied by an increase in open interest in stablecoin-margined futures contracts.
The bearish activity around $31,000 has established the said level as key resistance to watch out for in the short-term. At press time, bitcoin changed hands at $30,350, per CoinDesk data.
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