Bitcoin (BTC) price soared to $37,900 on Thursday as it scored a 3rd yearly peak in the space of 3 weeks.
Bullish futures traders have increased BTC capital stock to $17 billion on Saturday, November 11, rather than retreat amid the mild-price consolidation.
Technical analysis indicators show that BTC could reclaim $40,000 it breaks out of the current consolidation phase.
Bitcoin price briefly grazed $38,000 on Thursday as the bulls drove BTC to a third yearly peak within the space of 3 weeks. On-chain analysis examines how BTC Futures markets hitting a historic high of $17 billion could impact BTC price action in the coming weeks.
Bitcoin Futures Hit $17 Billion For the First Time Since TerraUST Crash
Over the past month, Bitcoin hit 3 new price peaks for 2023. The rally has been majorly attributed to corporate investors buying up BTC to front-run the impending approval of Spot Bitcoin ETFs by the US Securities and Exchange Commission (SEC).
However, a closer look at the derivatives trading data shows that investors have piled on record amount of capital inflows into BTC Futures markets during that period.
The Coinglass chart below illustrates how BTC Open Interest stood at $12.3 billion a month ago, on October 11. But that figure since grown rapidly by reaching an 18-month peak of $16.5 billion on November 11.
This means that futures markets traders have bet an additional $3.8 billion on BTC price rally within the past month.he last that b
Bitcoin (BTC) Price vs. Open Interest | Source: CoinglassOpen Interest quantifies the total capital invested in active or outstanding BTC futures contracts. Typically, an increase in Open Interest is a bullish signal indicating that more investors are bringing capital into the markets that those exiting their positions. When it increases during a rally, it means investors remain confident that the current price uptrend will continue.
For two main reasons, strategic investors will anticipate this bullish indicator to drive up BTC price above $40,000.
Firstly, the 3.8 billion additional capital has seen the total BTC Open Interest increase by 30% between October 11 and November 11. Meanwhile BTC price has increased by 37% during that period. This implies that every additional dollar invested has the potential to drive up BTC price exponentially.
Secondly, the last time Bitcoin Open Interest was in May 2022, just before the infamous TerraUST crash. At the time BTC price was at $39,000. This is a clear indication that, at $37,500, the current BTC price is still undervalued, relative to the capital traded in the secondary derivatives markets.
Going by this historical analysis, BTC price is likely to make another leg-up toward reclaiming $40,000 in the days ahead.
BTC Price Prediction: Can the Rally Reach $40,000 ?
From an on-chain perspective, the Bitcoin futures markets hitting $17 billion for the first time in 18 months puts BTC in a prime position to break into a new 2023 peak above $40,000.
However, the daily time frame, technical analysis indicators suggest that BTC price will enter a momentary consolidation phase before breaking out above $40,000.
As seen below, at $37,100 Bitcoin price is current trading above the Upper Bollinger band of $37,081.
When the current Bitcoin (BTC) price is higher than the Upper Bollinger Band, it suggests that BTC is trading at a relatively higher price compared to the upper boundary of the typical price range. This situation can indicate that BTC is in overbought territory. Traders often interpret this as a bearish signal, as it may suggest that BTC is at risk of a price pullback or consolidation.
However if BTC price retraces, the bulls will mount signifiant support wall around the lower Bollinger band at $34,900. Failure to hold that support level could effectively turn the Bitcoin price rally on its head.
Bitcoin (BTC) Price Prediction, November 2023. Source: TradingViewBut on the upside, the bullish momentum in the Futures markets could drive BTC price above $40,000. However, in that case, the bulls must scale the major ressistance territory at $38,200 to be confident of reclaiming $40,000.