Bitcoin Price Prediction: Low OI Sets Stage for BTC’s Next Leg Up to $160K

Bitcoin (BTC) has gone up by 4% in the past 7 days as cryptos continue to recover ahead of this week’s FOMC meeting.

Market participants were shocked a few weeks ago when President Donald Trump imposed a 100% tariff increase on Chinese imported goods, causing a market-wide flash-crash that inflicted heavy losses on traders.

As a result, open interest (OI) in Bitcoin futures experienced a strong decline as traders went away for a while to lick their wounds and wait until the market recovered its senses.

Now, with a 25bps rate cut on the table, low OI could set the stage for Bitcoin’s next leg up as traders could jump back into the market if they see the Fed downplaying the impact of Trump’s latest aggressive trade policies.

Traders Have Not Been Participating In BTC’s Recovery

Data from FedWatch indicates that traders unanimously see this cut as a “done deal” despite these latest developments. Moreover, September’s inflation readings, which came in below the market’s consensus estimate, confirmed this view.

If market sentiment improves after the Fed’s rate cut, this could attract billions to the futures market and put some upward pressure in the price of BTC that could push it back to at least $125K in the near term.

Open Interest in BTC Futures – Source: CoinGlass

The last time that OI was this low, the price rallied by 25% a few weeks later, moving from around $100K to $125K. If we get a similar move this time, that would mean a push from $115,000 to $144,000 at least.

Sentiment has been progressively improving ahead of Wednesday’s widely awaited decision. The Fear and Greed Index has recovered from 25 back in October 17 to 42 at the time of writing.

Paired with low OI, this sets the stage for a major leg up as the price has been progressively rising despite traders’ low participation. Hence, it has been long-term investors primarily who have been fueling this rally.

BTC Has Been Consolidating Since July – Can It Break Through $125K This Time?

We can see that BTC has been consolidating for a while, hitting $125,000 multiple times along the way and making new all-time highs with a relatively short distance between each other.

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

The 200-day exponential moving average (EMA) acted as a key support level recently. BTC has bounced strongly off this mark and has been closing the past 5 sessions in green territory.

In addition, the Relative Strength Index (RSI) just sent a buy signal upon crossing above the 14-day moving average and the oscillator’s mid-line. Trading volumes have increased in the past few days, meaning that buying pressure has been strong as BTC dipped.

Moreover, exchange-traded funds (ETF) linked to BTC closed last week with positive net inflows despite this latest wave of negative sentiment.

All of these technical indicators show that BTC has been in an accumulation phase where deep-pocketed players took advantage of the dip to load up, as they wait for the Fed’s interest rate decision.

This sets the stage for a major push to $140K at least, which would be confirmed if BTC breaks through the $125,000 ceiling once again.