Open Interest Drop in Bitcoin

Open interest in Bitcoin has dropped by a substantial $2 billion, as traders prepare for possible volatility ahead of the U.S. election. This significant decline in OI indicates that participants are closing out long and short positions to prevent unrest from the political results.

Generally, a decline in OI suggests that traders are waiting to re-enter the market once the election uncertainty passes. Another significant factor is a decrease in whale activity. The number of major whale transactions has declined since the Oct. 29 surge, where whales made a profit of $72,000 BTC.

Whale passivity is often misinterpreted to indicate declining prices; instead, they may be waiting for the market's response to the election before making significant moves. They typically observe crowd behavior and strategically respond, allowing individual traders’ actions to set the stage for a potential volatility spike. Historically, spikes in whale Bitcoin transactions have preceded price reversals, while their passive behavior suggests expected volatility.

Whales seem to be delaying large trades, anticipating the impact of smaller retail traders who may react more vigorously to election outcomes. This wait-and-watch strategy allows whales to suppress volatility until a clear market reaction occurs.

Given the predicted volatility post-U.S. election, traders should exercise caution, as there may be significant price swings in either direction. This situation appears to be a classic calm-before-the-storm, with major players poised to profit from movements related to political and economic changes. Observers of whale activity are likely to gain early insights into the market's next move.

This article was originally published on U.Today