Open interest on Bitcoin-denominated futures hits 660,000 BTC despite volatility remaining relatively flat.
Bitcoin (BTC) saw sudden volatility at the open on Wall Street on October 12, as economic data from the United States began to move the markets.
Analyst: PPI volatility is a sign of things to come
Data from Cointelegraph Markets Pro and TradingView showed the BTC/USD pair fell sharply below $19,000 as Producer Price Index figures beat expectations.
An indication that inflation is not slowing as fast as the Fed might hope, the PPI release an hour before the open saw local lows of $18,967.
However, the losses disappeared as quickly as they came, and at the time of writing, Bitcoin had already rallied above $19,000.
“Massive volatility in this PPI number. At least inflation isn’t accelerating,” wrote Michaël van de Poppe, co-founder and CEO of trading platform Eight, in part of a reaction on Twitter.
“But, tomorrow, during the CPI, the volatility will be higher. Also tonight during the FOMC minutes.”
Van de Poppe advised traders to stay away from leverage during upcoming macroeconomic events, with the CPI in particular. leading to some characteristic forgeries both before and after publication.
Bitcoin’s trading range, however, remained tight, and for some market participants, there was no need to exploit small comparative moves in the market.
In his latest update on trading the BTC/USD pair on Oct. 11, popular Crypto trader Il Capo described the setup as “simple.”
“Price has been hovering between $19,000 and $20,500 for 3 weeks,” summarized.
“If you make a random trade during the range, while losing money unnecessarily, that means you have no patience. The main scenario is exactly the same. $21,000 first, then new lows ($14,000-16,000).”
A trip to those new macroeconomic lows would spell big trouble for derivatives traders participating in the largest buildup of open interest in Bitcoin futures ever recorded.
According to on-chain analytics resource Glassnode, the count stood at 660,000 BTC.
“Bitcoin futures open interest is at an all time high and realized volatility is near an all time low. Quite a combo”, commented William Clemente, co-founder of digital asset trading and research firm Reflexivity Research.
DXY stabilizes but yen bleeds lower
After the open, US equities curbed losses after initially sinking.
The US Dollar Index (DXY) continued its latest phase of consolidation, holding close to 113.3 after holding back above 113.5 on the day.
DXY, still more than a point off its 20-year highs, did not deter risk assets.
However, the dollar’s strength has sparked a crisis elsewhere, as the Japanese yen has returned to levels not seen since the 1990s.
Despite the central bank’s efforts to prop up the currency, the USD/JPY pair erased those gains through October, and is now facing new multi-decade highs.
“Re-acquaint yourself with the concept of ‘intervention half-life,'” answered financial investigator Nick Bhatia.
“We will see it in UK yields, USDJPY Central bank freaks out, intervenes, and arb traders fade it until the central bank is forced to bring more.”
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