The notable point right now is that $BTC price continues to weaken, while Open Interest is showing signs of increasing again. This suggests that the derivatives market is starting to build new positions, rather than simply removing leverage from the market.

In any case, this is still a signal that volatility risk is rising, because the more positions are opened while price is weakening, the more likely the market is to see a strong squeeze move.

For $BTC, the next thing to watch is the direction of the price breakout.

If price continues to lose support, rising OI could amplify selling pressure. But if price rebounds strongly while OI remains high, the market could witness a short-term short squeeze.

Written by Rei Researcher