Posted on

Solana, Ethereum Attract Traders Amid Bitcoin Open Interest Plunge

Data shows that Bitcoin (BTC) Open Interest plummeted during the latest market retrace, but Solana (SOL) and Ethereum (ETH) have been resilient.

Solana & Ethereum Open Interest Has Only Seen A Mild Retrace

According to data from the analytics firm Santiment, Bitcoin has seen its Open Interest plunge after the pullback in its price. The “Open Interest” here refers to a metric that keeps track of the total amount of derivatives positions related to a given asset (in USD) currently open on all exchanges.

When the value of this metric goes up, investors will be opening new positions in the derivatives market right now. As new positions generally suggest a rise of total leverage in the market, the Open Interest registering this trend can lead to more volatility for the cryptocurrency’s price.

On the other hand, the indicator observing a decline implies some investors are either closing up their positions of their own volition or getting forcibly liquidated by their platform. The asset tends to behave more stably once such a decrease goes through.

Now, here is a chart that shows the trend in the Open Interest for three top coins in the sector, Bitcoin, Ethereum, and Solana, over the past month:

Bitcoin, Solana, and Ethereum Open Interest

As displayed in the above graph, the Bitcoin Open Interest has dropped around 7.5% in the past day. The reason behind this plunge will likely be the asset’s retrace to levels under $63,000.

Interestingly, while Ethereum and Solana have registered similar price drawdowns inside this window, the Open Interest is only down around 2% for both of them.

It’s possible that Bitcoin was simply the most leveraged of these assets, so the relatively small price drop was enough to cause significant liquidations. There are also some other possibilities, however.

The investors may be more interested in the altcoins right now, choosing to close down BTC-related positions and opening up more positions related to alts like Solana and Ethereum.

It’s hard to say whether this increased appetite for speculation around Solana and Ethereum relative to Bitcoin is a positive for the market. Still, it does set these coins up to see some action shortly.

On the topic of liquidations, data from CoinGlass has revealed the exact figures related to the Open Interest flush the cryptocurrency sector has witnessed in the last 24 hours.

Bitcoin, Solana, Ethereum Liquidations

The table shows that $107 million in cryptocurrency derivatives contracts have found liquidation during the past day, with over $88 million of these coming from the long contract holders alone.

SOL Price

At the time of writing, Solana is trading around $156, up almost 7% over the past week.

Solana Price Chart

Posted on

Solana Open Interest Plunges 20%: What It Means For Price

Data shows the Solana (SOL) Open Interest has seen a 20% plunge in the past day. Here’s what this could mean for the cryptocurrency’s price.

Solana Open Interest Has Plunged After Market Volatility

According to data from the analytics firm Santiment, the Open Interest of Solana and other cryptocurrencies has seen a steep decline since Bitcoin has set its new all-time high.

The “Open Interest” here refers to the total amount of derivative contracts (like futures and options) of a given cryptocurrency that are currently open on all exchanges. The metric makes this measurement in terms of the US Dollar (USD).

When the value of this metric goes up, it means that traders are opening up fresh derivative positions right now. Since such a trend usually results in the total leverage in the market rising, the asset may be more likely to witness volatility following it.

On the other hand, a decrease in the indicator implies either the holders are closing up their positions of their own volition or are getting liquidated by their platform. This kind of trend may lead towards more stable price action for the coin, assuming that leverage goes down alongside this decrease.

Now, here is a chart that shows the trend in the Open Interest for Solana, as well as for Bitcoin and Ethereum, over the past month:

Solana Open Interest

As displayed in the above graph, all three of these cryptocurrencies have registered a notable drop in the metric as a consequence of the sharp price action the market has witnessed in the past day.

To be more particular, Bitcoin has seen its Open Interest drop by around $1.42 billion (corresponding to a change of -12%), Ethereum $967 million (-15%), and Solana $424 million (-20%).

Thus, it would appear that SOL saw the sharpest drawdown in the indicator as compared to the top two coins in the sector. In this Open Interest flush, investors of a variety would have been liquidated, like those who would have longed as SOL pushed up or those who opened shorts after its price crashed.

“In a way, we can view this open interest plummet as a sign that ‘speculative excess’ has been temporarily removed from the markets,” explains the analytics firm.

“Assuming funding rates can even out, prices can theoretically fluctuate under less influence of futures and options positions, and more on a true supply and demand market valuation from traders, investors, and hodlers,” notes Santiment.

SOL Price

After strong volatility in both directions during the past day, Solana has ended up arriving at the $130 mark. It’s unclear if the coin would become more stable now or if volatile price action would continue, but if the Open Interest is to go by, some stability could appear.

Solana Price Chart

Posted on

Solana, Chainlink Among Coins With Overheating Open Interest: Data

Data shows Solana and Chainlink are among the top cryptocurrencies that have observed growth in Open Interest to relatively high levels.

Solana & Chainlink Have Their Open Interest At Notable Values Currently

According to data from the on-chain analytics firm Santiment, there has been a dramatic increase in interest in the derivative market for cryptocurrencies recently.

The indicator of relevance here is the “Open Interest,” which keeps track of the total amount of derivative contracts for any given asset that is currently open on all centralized exchanges.

When the value of this metric goes up, it means that the investors are increasing positions on the derivative side of the market. Such a trend may be a predictor for higher volatility, as the total leverage in the sector tends to go up when new futures positions pop up.

On the other hand, a decrease in the indicator implies the holders are closing up their positions or are getting forcefully liquidated by their platform, thus leading to the leverage potentially coming down. As such, this kind of trend can result in the asset’s price becoming more stable.

Now, here is a chart that shows the trend in the Open Interest for various top assets in the cryptocurrency sector over the past year:

Solana & Chainlink Open Interest

As displayed in the above graph, the Open Interest has exploded for Bitcoin and Ethereum recently as the latest surge in prices has occurred. Generally, such sharp price action attracts a large amount of speculators to the assets, so the indicator’s upward trajectory isn’t surprising.

The scale of the increase, though, may be a bit concerning. From the chart, it’s visible that the BTC Open Interest is currently around $9.85 billion, while for ETH, it’s about $5.59 billion.

Among the altcoins, Solana and Chainlink have particularly stood out, as the indicator has touched $1.62 billion and $549 million for them, respectively. These are much smaller values than Bitcoin and Ethereum, of course, but their market caps are also much smaller than these two titans.

“With Bitcoin, in particular, crossing over $10B in open interest for the first time since July, 2022, this does signal crowd euphoria is alive and well,” notes the analytics firm. “Sometimes rising too quickly can be indicative of some caution flags.”

The reason that a high Open Interest has historically been a cause for concern is that mass liquidation events become more probable to occur in such market conditions, due to an abundance of leverage.

Such events, where liquidations can cascade together, are usually chaotic and result in some sharp price action. As Solana, Chainlink, and other top assets have a potentially overheated Open Interest right now, they may be ones to watch in the coming days, as any further increases might serve as a warning.

SOL Price

At the time of writing, Solana is trading around the $110 level, down over 3% in the last seven days.

Solana Price Chart