On November 4, the CryptoQuant cryptocurrency market aggregate released a chart showing that Binance’s calculated leverage ratio (open interest rate divided by Bitcoin reserves (BTC)) has reached a permanent high.
The record was set on November 3 after ELR first climbed above 0.18 on Binance due to open interest. The ELR rally came shortly before Bitcoin created a double bottom around $ 13,400.
New data suggests that Bitcoin’s strong pressure on 2020 highs above $ 14,000 could be due to leverage, which could mean that markets will continue to experience significant volatility in the short term.
However, Binance also recorded the largest daily BTC inflow on November 3, with 58,861 bitcoins worth $ 816 million going public within 24 hours.
Binance isn’t the only platform that has seen a rise in open interest lately: Skew data indicates that the general interest in Bitcoin futures is testing constant highs in the mid and high range of $ 5 billion.
The increase in open interest is also taking place despite the recent decline in BitMEX’s market share as the stock exchange is currently facing money laundering charges imposed by the US Department of Justice.
Consolidation of open interest may indicate bullish sentiment if driven by long positions, Messari said. The research company also notes that the data shows that new capital could flow into cryptocurrencies:
“A rise in prices during an uptrend with a simultaneous increase in open interest may mean new money is coming into the market.”
The increased open interest is also due to the fact that the amount of BTC on exchanges has been declining regularly since May, indicating that buyers are collecting bitcoins from exchanges and putting them in cold storage as a long-term investment.
Long positions on Bitfinex have also grown steadily since early October, rising from 25,000 to 29,000 at the time of writing. While short positions have also increased since October 20, doubling from 3,250 to 6,770, it looks like the bears are holding onto the markets.
Over the past two hours, BTC has climbed to new highs for 2020, surpassing $ 14,300.