Will Bitcoin confirm market structure change above $67K?

Bitcoin price is up 10% in seven days, shattering $67,000 threshold on Friday.
Over $120 million in total liquidations recorded across crypto market.
$2.1 billion worth of Bitcoin and Ethereum options expire today.
A stable close above $67K would indicate a change in market structure

Bitcoin (BTC) price continues to show strength even as the market prepares for the weekend. After the April CPI release on Wednesday, and multiple news pointing to retail and institutional interest for BTC exposure through exchange-traded funds (ETF), the pioneer cryptocurrency is closing the week with the right foot forward.

Also Read: Bitcoin Weekly Forecast: Is BTC out of the woods?

Daily digest market mover: Bitcoin rallies, blows over $120 million in positions out the water

Bitcoin price is trading with a bullish bias, boasting up to 10% in gains over the past seven days. In the last 24 hours, it is up by 2.2%, which is not a mean feat even for the king of crypto. With altcoins taking the same cues, the global crypto market capitalization is up by 2.8% to $2.43 trillion.

With the surge, over $120 million in total positions have been liquidated across the market. This is composed of $83 million in short positions and nearly $40 million in long positions.

Total liquidations

Meanwhile, up to $2.1 billion worth of Bitcoin and Ethereum options expire today. Specifically, 18,000 BTC options are set to expire with a put call ratio of 0.63. The maximum pain point is at $63,000 with notional value of $1.2 billion.

JUST IN: $2,100,000,000 worth of #Bitcoin & #Ethereum options expire today.
— wallstreetbets alerts (@wsbalerts) May 17, 2024

For the layperson, a significant amount of cryptocurrency derivative contracts have reached their expiration date on the same day. These options contracts give the holder the right, but not the obligation, to buy or sell a specified amount of Bitcoin or Ethereum at a predetermined price on a future date.

The expiration of such a large amount of options contracts can sometimes lead to increased volatility in the cryptocurrency market. This comes as traders close out their positions or adjust their strategies based on the expiring contracts. It can also impact the overall sentiment and direction of the market in the short term.

Open Interest, funding rate FAQs

How does Open Interest affect cryptocurrency prices?

Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.

How does Funding rate affect cryptocurrency prices?

Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.

Technical analysis: Bitcoin price attempts market structure change above $67,000

Bitcoin price has forayed above the $67,000 level after a series of higher highs on the one-day time frame. After a sequence of lower highs between April 8 and May 9, BTC has overcome the critical threshold of $65,500. If it confirms a candlestick close above the $67,000 level, it would validate a change in market structure.

Typically, a change in market structure is characterized by changes in price behavior, trading volume, volatility and other market dynamics. This shift can be indicative of a transition from one phase to another in terms of market sentiment, investor behavior and market participants' activities.

For BTC, it means a shift from a ranging market to a trending market. Notice the sustained higher lows of the Relative Strength Index (RSI), showing that buyer momentum continues to rise.

The Awesome Oscillator (AO) flipping into positive territory with green histogram bars reinforces this. A green AO signals that the most recent market momentum is bullish. When it is climbing toward positive territory, it suggests that the bullish momentum is strengthening.

A stable close above $67,206 on the one-day time frame would set the pace for a continuation of the climb toward $70,000 psychological level. In a highly bullish case, BTC could flip this threshold into a support floor and use it as the jumping-off point to target the $73,777 all-time high.

BTC/USDT 1-day chart

On the other hand, a rejection from the $67,000 area could see Bitcoin price retract below $65,500 level. Lower, a key level to watch would be the $63,354 support level. If it fails to hold, late bulls could catch BTC around the $56,000 area, 16% below current levels.

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