Today Bitcoin (BTC) price blasted through the $20,000 level and in the process, a tape $7.9 billion in futures open interest was set.

Although the toll increased by 74% over the past 2 months, the total accumulated brusk-seller liquidations amounted to $four.three billion, which is lower than the $4.8 billion from longs.

BTC futures amass open up interest. Source: Bybt.com

Every bit shown in the chart above, the futures aggregate open up interest increased by 90% over the by ii months. Thus, signaling that investors are increasing their positions, which in plough allows even larger players to participate.

It is also worth noting that the Chicago Mercantile Substitution (CME) now holds over $1.3 billion of these contracts, indisputable prove of the growing institutional participation in BTC markets.

By looking at daily liquidations, investors tin can better assess how traders have been using leverage. Unexpected toll swings will tend to cause higher liquidations than those ongoing trends, such every bit the recent Bitcoin breakout to $20,800.

BTC futures aggregate daily liquidations. Source: Coinalyze.net

Take notice of the largest candle represents longs getting their positions forcefully terminated on Nov. 26 as BTC toll dropped 14.4% in 12 hours. Today's $20,000 resistance interruption acquired $365 million worth of shorts to liquidate, but this is however no friction match to the previous month'southward $902 million bearish move.

Volume failed to keep up with the new BTC toll loftier

The recent volume downtrend is another reason for bears to celebrate. Bitcoin'south non-adapted total trading book decreased by xl% over the last three weeks.

Full cryptocurrencies daily volume, USD. Source: TradingView

Bitcoin'south daily average trading book on spot exchanges reached $45 billion in belatedly November and has since declined to $25 billion. While there is the possibility that exchanges may take inflated their volumes, in that location could besides exist some bearish maneuvers in play.

All the same, a similar forty% decline occurred at Coinbase'south BTC/USD and Binance BTC/USDT markets. Therefore, bears might hope that such volume weakness indicates a lack of confidence in $20,000 turning into a support level.

Perpetual futures reflect excessive leverage

Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every 8 hours. Fifty-fifty though both buyers and sellers' open interest is matched at all times, their leverage tin can vary.

When buyers (longs) are the ones demanding more leverage, the funding charge per unit turns positive. Therefore, the buyers will be the ones paying up the fees.

BTC perpetual futures funding rates. Source: Digital Assets Data

Sustained funding rates above 4% per week translate to extreme optimism. This level is acceptable during market rallies but problematic if the BTC cost is sideways. A loftier behave cost might force longs (buyers) to reduce their positions, therefore increasing sell force per unit area.

In situations like these, high leverage from buyers increases because of the increased risk that large liquidations will occur on surprise price drops.

Thus, bears might be belongings their cards close to their chest, awaiting the best moment to examination the marketplace.

It's possible that this could either happen closer to the December. 25 futures and options expiry or during weekends when society books are ordinarily thinner.

The views and opinions expressed here are solely those of the autho r and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves adventure. You should behave your own research when making a decision.