The Bitcoin price is trading at $72,288 as of 3:30 am EST, up 2.88% over the last 24 hours.
BTC price hit a record high on March 12, reaching $72,943 on Coinbase, driven by increasing demand from spot Bitcoin ETFs and the upcoming supply halving.
As the big crypto enters new price discovery, increasing open interest and overbought conditions show that BTC could be at risk of a correction in the short term.
Data from Coinglass shows that Bitcoin futures open interest (OI) rose to $34.48 billion on March 12, the highest it has ever reached.
Bitcoin’s OI hit new all-time highs the same day BTC price entered the $70,000s to new record highs. High OI means traders are over-relying on leveraged positions, which poses a risk for the price of the pioneer cryptocurrency.
Bitcoin futures open interest on all exchanges. Source: Coinglass
A high open interest (OI) in futures markets is usually deemed bullish as it indicates that new buyers are entering the market and making aggressive purchases.
However, if OI grows too high, it can sometimes be a bearish signal. This is because it can indicate a coming change in market trends.
Is this the case for Bitcoin price?
Bitcoin has seen a volatile few months, and experts are largely bullish in the year to come for crypto. The largest cryptocurrency by market capitalization has increased by 90% over the last six weeks. This has seen the crypto scale above new all-time highs, taking the entire market with it.
However, the relative strength index (RSI) is moving within the overbought region, showing that Bitcoin is extremely overbought. Note that at the current prices, all BTC addresses are in the money, which increases the potential of booking profits on the latest rise to $72,000.
As such, BTC could turn down from the current price, with the key levels to watch on the downside being the $70,000 psychological level, the 68,000 support wall and the 78.6% Fibonacci retracement level at $65,572.
The defense line at $60,000 could be where Bitcoin’s downside is capped for the short term. This would represent a 17% drop from the current price.
On the upside, the position of the RSI at 79 reinforced the dominance of buyers in the market. These bulls could push the price higher toward higher all-time highs.
