Bitcoin long position interest is hovering at the highest levels of the last 12 months

by James · August 22, 2022

Since the price of Bitcoin (BTC) started to show signs of resilience in mid-June, there has been a lot of interest in increasing the number of open long positions, which has since reached its highest level in the past 12 months.

Bitcoin’s long holdings had hovered around 40,000 to 50,000 long BTC contracts in the months leading up to the end of May 2022, when the number suddenly jumped to over 80,000 contracts.

This number first passed 100,000 long BTC contracts on June 13, and since peaking at 109,416 on June 17, it has remained at over 100,000 contracts since then, currently at 103,111 as of August 22, according to data obtained from Datamish.

Bitcoin long positions 1 year chart. Source: Datamish

In particular, the longs (bull) indicator has seen significant growth since mid-May. It is currently hovering around its highest ever record and can now be considered a general 2-month trend with high long position interest.

To get an idea of the significance of this shift, one can consider it against the previous record high of 54,500 BTC contracts in longs, which occurred between June and July 2021. While a year ago, in August 2021, the number was less than 40,000 BTC long contracts.

Interestingly, these investors long ago peaked in June 2022, just as the price of Bitcoin hit its low point. In the following months, they may well have the opportunity to make money by selling the long (bull) futures, thus reducing the number of open long positions.

Liquidated longs

Compared to other cryptocurrencies, the large number of long positions indicates that traders believe Bitcoin’s price may continue to rise from current levels and that the market may have seen its worst sell-off at this point.

It’s also an indication that Bitcoin continues to lead the market, and thus crypto traders may feel more comfortable going long on the flagship over an altcoin.

With the high number of long positions, Friday 19 August, liquidations were the largest on the chain since Bitcoin crashed from $30,000 to below $22,500 in June as short sellers took advantage.

Bitcoin Liquidations August 19 Source: Coinanalyze

This liquidated $600 million from the market. To put this into perspective, this is almost the same as the capitulation in June from the Terra (LUNA) collapse, which led to the capitulation of Three Arrows Capital (3AC).

Some believe that this reset is necessary to get rid of all leverage so that the price of bitcoin can go higher.

Analyst’s opinion on BTC longs for

Finally, prominent crypto market analyst Michaël van de Poppe had previously proposed if a move to $24,000 happens, a flip to $23,700 is a trigger for longs.

Bitcoin long position measure. Source: Michael van de Poppe

Ultimately, by zooming out on Bitcoin’s price chart, one can see how the price movement of Bitcoin may have enticed many traders to execute long positions.

The pullback towards the end of July was short, giving the impression that the price floor was firmer than it was. As a result, traders with leverage may have been motivated to execute longs in anticipation of more price appreciation.

Bitcoin is currently trading at $21,099, down 1.03% over the past 24 hours and 12.28% over the past seven days, according to data from CoinMarketCap.

Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.