TLDR
- Open Interest in Bitcoin and Ethereum futures climbed from $35 billion to $38 billion this month.
- Trading activity fell by 40%, highlighting a dangerous divergence between volume and leverage.
- The Fear Index stands at 37, suggesting a persistent optimism that hinders the necessary capitulation.
The digital asset market is closing the year under unusual pressure. Transaction volume decreased significantly, but in December, crypto Open Interest recorded an increase of $2.4 billion.
Analysts from CryptoQuant reported this phenomenon, noting that traders opened new leveraged positions with faith in a swift recovery, rather than reducing their exposure in the face of price weakness. Specifically, interest in the pioneer cryptocurrency rose to $23 billion, while Ethereum added $1.4 billion, reaching the $15 billion mark.
This accumulation of risk occurs while Bitcoin struggles to stay near $88,000. On-chain data shows that in the last week alone, $450 million in new leverage was added.
However, this retail conviction contrasts with institutional behavior; while crypto Open Interest grows, whales withdrew approximately 20,000 BTC from the market, suggesting that professional money is exiting while the retail sector increases its margin bets.
Liquidation Risks and Bitcoin’s Struggle to Close the Year in the Green
On the technical side, the scenario is complex. A Fear Index of 37, combined with growing crypto Open Interest, contradicts typical market bottom signals.
Experts assert that real bottoms are formed when leverage is flushed out, not when it is built up. This resistance to capitulation could lead to a liquidation cascade if the price fails to rebound soon.
With only a few days left in the month, Bitcoin needs a boost of over 6% to avoid closing its first post-halving year in the red. However, selling pressure from tax-loss harvesting in the U.S. continues to weigh on the price.
On the other hand, John Glover from Ledn suggests that while the long-term future is promising, we are likely to see a sideways trend or even drops toward the $84,000 range before finding a definitive support that validates traders’ current confidence.
