Bitcoin gives a way to further upside

 Bitcoin’s decline to $42,000 obliterated its open interest and liquidated a large swath of leveraged traders, but analysts state OI resets commonly provide excellent buying opportunities.

The weekend is upon us, and anxiety remains the dominant short-term sentiment in the cryptocurrency market. Earlier on Dec. 11, Bitcoin’s (BTC) price fell to $47,250. Investors are biting their nails behind the United States consumer price index (CPI) data. It showed inflation reaching a forty-year high at 6.8%.

Data from Cointelegraph Markets Pro and TradingView indicates that a midday push by bulls will reclaim the $50,000 support level. Sellers sent the price back below $48,000, which could push another daily lower high for the top-ranked cryptocurrency. 

With the possibility of a significant run-up in price to end the year all but dashed, traders have turned their attention to managing risk and determining the best levels to buy dips. 

Open Interest Wipeout Will Give Form to The Further Upside

As witnessed in previous instances the price of BTC saw a quick drop. Hence, there has been a significant reduction in the open interest (OI) for BTC on derivative exchanges, as emphasized in a recent report from Delphi Digital. Behind this latest market downturn, the report cited a 50% reduction in OI, as over-leveraged longs positions went to waste.

The venture was likely undesirable for overexposed traders. However, the analysts indicated that deleveraging events like this are beneficial over the long term and will usually “give way to further upside,” as the prior froth and over-exuberance are replaced with a more measured trading environment.

The sharp decline in OI over the past month may also signal that the short-term bottom for BTC may be following Delphi Digital. Hence, it’s conceivable that the current sell-off could be getting to the point of exhaustion.