Bitcoin Price News: This Futures Market Metric Has Sent a Contrarian “Buy” Signal

The crypto market continues to experience significant turmoil as prices dropped sharply yesterday, causing a 2% loss for Bitcoin (BTC) and pushing it once again back to a key horizontal support.

Long liquidations have spiked near $600 million once again as a result of this drop. The market is probably preparing for today’s data-heavy morning, with multiple jobs reports lined up to hit the desks just a few minutes from now.

A delayed non-farm payrolls report from October is probably the most relevant of all for the crypto market. The market expects that 55,000 new jobs were created during that month. However, September’s report blew past analysts’ consensus estimates with 119,000 new positions.

If we get another similar surprise, cryptos could recover as this would give the Federal Reserve further evidence that its dovish policies are having a positive impact on economic growth.

Open Interest Hits Lowest Level Since April and That Could Be Good

On the other hand, a handful of metrics have reached extreme levels, including one associated with the futures market that could imply that we are nearing a cycle bottom.

According to Glassnode’s open interest (OI) tracking for BTC futures, traders’ interest in these instruments, expressed as the amount of outstanding contracts, has reached levels not seen since April, back when the market hit a local bottom.

 

Open Interest in BTC Futures – Source: GlassNode

This metric has even broken below its lower band, meaning that traders were heavily spooked by the October 10 flash crash and are still reluctant to jump back into the market as extreme downward volatility persists.

Back in April, when OI levels were this low, the price bottomed and started to rally right after. BTC made a new all-time high just a few weeks later, primarily as the macroeconomic conditions were improving.

Similarly, in August 2024, OI dropped below its lower band as well and signaled a cycle bottom. Shortly after, BTC rallied from a low of around $50,000 to over $100K, also in just a couple of months.

Meanwhile, as we cited in a previous Bitcoin price prediction, the percentage of investors who are currently sitting on profits has dropped to a 2-year low of around 67%, primarily as top-cycle buying was strong.

It appears that FOMO took over the market back when BTC hit $126,000. With the price now standing 31% below that mark, those who bought at the top are feeling the sting of the latest wave of selling.

This explains why BTC may have struggled to recover as a big portion of these late buyers may have capitulated recently, putting additional downward pressure on the price that is not justified by fundamentals.

Although inconvenient in the near term, if this is the reason why the sell-off has not stopped, we could expect a rebound in the next few weeks, as the smart money could see these extremely depressed metrics as their “buy” signal.

BTC May Trade Range-Bound For a While Unless This Happens

The daily chart shows that BTC has temporarily found support at $85,000. This is the third time that the token has hit this level in less than 30 days, meaning that the market has been unable to find liquidity to keep rallying at higher prices.

BTC/USD Daily Chart (Bitstamp) – Source: TradingView

However, the token is about to break out of its descending price channel, and this could be a positive indication that BTC is starting to recover.

This may not necessarily lead to a spike in the near term. Instead, it could push BTC into an accumulation phase as December tends to be a slow month.

We could expect range-bound movements between $85,000 and $100,000 that could be great for traders who catch the price at these extremes and profit from the ups and downs that could follow.

That said, if we get a bearish breakout below $85,000, BTC could experience a much deeper correction to $76,000 at least. In contrast, a move above $100,000 would confirm a bullish outlook and could ignite the next leg up, which could result in a retest of BTC’s latest all-time highs.