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Bitcoin long position interest hovers at highest levels in the last 12 months

Bitcoin long position interest hovers at highest levels in the last 12 months
Jordan
Major
1 month ago
3 mins read

Since the price of Bitcoin (BTC) started showing indications of resilience in the middle of June, there has been a lot of interest in increasing the number of open long positions, which has since reached its highest level in the last 12 months.

Bitcoin’s long holdings had been hovering around 40,000 to 50,000 BTC long contracts in the months leading up to the end of May 2022, when the figure suddenly jumped to over 80,000 contracts. 

This number then first surpassed 100,000 BTC long contracts on June 13, and since hitting a peak of 109,416 on June 17, it has remained at over 100,000 contracts ever since, currently at 103,111 as of August 22, according to data obtained from Datamish.

Bitcoin long positions 1-year chart. Source: Datamish


Notably, the longs (bull) indicator has seen significant growth since the middle of May. It is presently hovering around its highest-ever registry and can now be considered a general 2-month trend of high long position interest. 

To get an idea of this shift’s significance, one may evaluate it in relation to the previous all-time high of 54,500 BTC contracts in longs, which occurred between June and July of 2021. While a year ago, in August 2021, the number was less than 40,000 BTC long contracts.

Interestingly, these investors long reached their peak in June 2022, just as the price of Bitcoin reached its low point. In the following months, they may well have the opportunity to make a profit by selling those long (bull) futures, therefore lowering the number of open long positions.

Liquidated longs

Compared to other cryptocurrencies, the large number of long positions indicates that traders think Bitcoin’s price may continue to rise from its present level and that the market may have seen the worst sell-off at this point.

It is also an indication that Bitcoin continues to lead the market, and thus crypto traders may feel more comfortable taking a long out on the flagship asset over an altcoin.

With the high number of long positions, on Friday, August 19, liquidations were the largest on-chain since Bitcoin crashed from $30,000 to under $22,500 in June as short sellers took advantage.

Bitcoin liquidations on August 19. Source: Coinanalyze

This liquidated $600 million from the market. To put this into perspective, this is almost the same as the capitulation in June from the Terra (LUNA) collapse, which led to the capitulation of Three Arrows Capital (3AC).

​​Some people believe this reset is necessary to get rid of all of the leverage longs so that the price of bitcoin may go higher. 

Analyst opinion on BTC longs

Finally, prominent crypto market analyst Michaël van de Poppe had earlier suggested if a move to $24,000 occurs, a flip of $23,700 is a trigger for longs.

Bitcoin long position target. Source: Michaël van de Poppe

Ultimately, zooming out on Bitcoin’s price chart, one can see how the price movement of Bitcoin may have lured many traders into executing long positions.

Its pullback towards the end of July was brief, giving the impression that the price floor was firmer than it was. As a result, leverage traders may have been motivated to execute longs in anticipation of more price appreciation.

Currently, Bitcoin is trading at $21,099, down 1.03% in the last 24 hours and 12.28% across the previous seven days, according to data from CoinMarketCap.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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Jordan Major
Author

Jordan is an investor and market analyst. He's passionate about stocks, ETFs, blockchain, and digital assets. At Finbold.com, he delves into the technicalities to obtain future trends for new market traders and gives insights into user-friendly platforms for beginners.

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