The crypto market endured a massive correction on Sunday and Monday, but it’s not all bad news, according to one popular digital asset analyst.
The pseudonymous trader known as Credible Crypto tells his 407,400 followers on the social media platform X that Bitcoin (BTC) witnessed a “beautiful wipe” of its open interest (OI), which tracks the total number of outstanding derivatives contracts for a given asset.
“Nature is healing. Note that the lower dotted green line is the lowest recorded OI we have seen in this entire range and the closer we get to that level, the healthier it is.
That being said, OI can get wiped on moves down (long liquidations) AND on moves up (short liquidations) so we don’t necessarily need to see OI completely ‘reset’ before hitting our bottom in terms of price.
Let’s continue to watch how things develop, but this wipe in OI is great to see.”
An open interest wipeout is typically a bullish signal for assets in an uptrend as it indicates that excessive leverage has been flushed out of the market.
BTC is trading at $55,888 at time of writing and is up more than 3% in the last 24 hours.
Credible also argues that the market correction is “only a temporary drawdown” that doesn’t change his medium or long-term outlook.
“The coins that were the strongest prior to this drop over the last 24 hours will also likely recover the fastest. The coins that were weakest prior to this drop will likely struggle.
This is not the time to be selling but rather taking advantage of discounts on those strong coins that we identified earlier because when the reversal happens they should lead the way.”
Generated Image: Midjourney