Bitcoin could drop by at least 22% in the coming weeks after open interest reaches record highs. Bitcoin’s BTC 
$70,942 price has rebounded by more than 7% seven days after hitting a two-week low of approximately $56,550, reaching around $71,560 on June 6. However, a sharp correction in the coming days is possible based on a number of technical and on-chain factors.
The latest recovery in BTC’s price has been fueled by a resurgence in spot Bitcoin exchange-traded funds (ETF) inflows that have surpassed $1.3 billion over the last two days.
100% of Bitcoin’s long-term traders are now in profit
BTC’s recent break above its November 2021 all-time high saw all the remaining long-term holders (LTHs) flip their unrealized losses into profit.
A report published by market intelligence firm Glassnode reveals that only 0.3% of long-term holders — those who have held Bitcoin for more than 155 days — were still in a “position of loss” when the price hovered around $68,000 on June 4.
“At the moment, the LTHs hold a marginal 0.3% of the supply in loss, whilst subsequently accounting for over 85% of the supply in profit.”
This group mainly consists of those who purchased Bitcoin during the 2021 bull cycle, when it reached its previous all-time high of $69,000 in November 2021.
Glassnode noted that the total volume of long-term holders at a loss at the said price was “negligible,” adding that as long as the crypto held above $69,000, all long-term Bitcoin holders will remain in profit.
According to data from Cointelegraph Markets Pro and TradingView, Bitcoin was trading at $71,138 at the time of publication. This suggests that all LTHs are now in profit.
A high number of holders in profit is often seen as a sign of FOMO, which typically precedes or coincides with price corrections. As a result of this on-chain signal, Bitcoin’s price may see pullbacks over the coming days as investors embark on profit booking.
Rising Bitcoin futures open interest warns of a price correction
In March, the Bitcoin futures open interest rose sharply, peaking at $36.31 billion, but the price failed to break the $72,000 resistance, leading to a 22% correction in 25 days. Similarly, with the latest run-up above $71,000, the open interest has increased by 12% over the last seven days to an all-time high of $37.61 billion on June 6, according to CoinGlass data.
With the current strong demand for BTC futures contracts, investors are contemplating the possibility of a pullback similar to that experienced in March.
Some traders argue that the rise in Bitcoin futures open interest indicates excessive borrowing.
A large amount of open interest can potentially increase price swings, particularly when traders hold multiple positions and decide to suddenly adjust their strategy.
It can also influence the overall sentiment of traders who use OI as a signal to decide whether to hold or sell their crypto assets.
Bitcoin price faces resistance at $72,000 level
From a technical point of view, the BTC price was fighting resistance from the psychological level of $72,000. Note that several attempts to push the price higher in the recent past have been rejected by supplier congestion from this zone. Bitcoin bulls were required to produce a decisive daily candlestick close above this level to sustain the recovery.
Conversely, failure to flip $72,000 into support would see the price drop lower, with the accompanying long position liquidations pulling the price toward $68,000.
Data from CoinGlass showed thick liquidity bids building up above $72,000, reinforcing the importance of the resistance around this area.
