- Bitcoin futures open interest has hit a 5-month low.
- Data from Kaiko indicates a drop to the lowest levels since the Terra crash.
- The impact of Grayscale’s decision will be seen in the medium term and could signal an early end to bear markets.
The final week of August started promisingly for Bitcoin, but the SEC’s ETF rejections were priced in early, leading to profit-taking and a drop in BTC price. Investors are currently viewing each peak as an opportunity for small profits, with a strong rally not in sight. However, the market sentiment remains neutral.
Bitcoin Data at a 5-Month Low
The cryptocurrency market is showing signs of fatigue, as evidenced by the declining open interest in Bitcoin futures. According to a recent report from Glassnode, open interest has fallen to a 5-month low of $2,796,429,005. This contraction in futures activity is causing despair among investors, especially as BTC struggles to reach $27,000.
Despite the overall gloomy trend, Grayscale’s victory against the SEC on August 29 brought some cheer to the market. However, this regulatory win has not yet signaled a permanent shift in sentiment, given the ongoing struggles in the spot market.
Current Bitcoin Commentary
Kaiko’s data suggests that open interest in Bitcoin futures contracts is beginning to recover, but it has not yet risen from the lows seen following the Terra network crash in May 2022.
Traders and analysts closely monitor futures open interest to gauge market sentiment. The decline in open interest could indicate a shift in investment strategy, as institutional traders may be reassessing their positions in light of these developments. According to experts, the buzz created by Grayscale’s victory is a promising sign. However, the cautious market stance will not lift unless other positive triggers, such as the long-awaited approval of a Bitcoin ETF, emerge.
Decisions on ETF applications will be announced on October 15. An early approval by the SEC would be a big surprise. However, if the Fed announces an interest rate cap at its September 20 meeting and the SEC approves several ETFs next month, it could signal the end of bear markets. As we have extensively explained before, the Grayscale decision does not seem reversible and significantly increases the possibility of ETF approval. Bloomberg experts give a 75% chance of ETF approval this year and a 95% chance next year.
Conclusion
The cryptocurrency market is currently in a state of caution, with Bitcoin futures open interest at a 5-month low. The impact of Grayscale’s victory against the SEC is yet to be fully realized. However, the potential approval of Bitcoin ETFs could bring about a positive shift in market sentiment.
