Bitcoin Price Recovering Amid Rising Open Interest and Declining Sell Pressure?

Bitcoin bears have been dominant for the last 3 weeks or so, with sentiment increasingly leaning on the side of FUD. However, fresh signs indicate the possibility of a bullish conclusion for Bitcoin price in the last week of February.

According to CryptoQuant analyst ShayanBTC , Bitcoin open interest has been on the rise despite the cryptocurrency’s struggle to find a bullish footing . This observation could indicate that BTC is finally ready for a bit of recovery.

The uptick in open interest may indicate a demand build up, an outcome that is already reflecting in Bitcoin price action. The cryptocurrency has so far achieved substantial upside in the last 3 days, with price recovering from a low of $93,34 to a $97,010 press time price tag.

Bitcoin price action | Source: TradingView

BTC’s bullish recovery in the last 3 days was courtesy of liquidity injection observed as per the MFI. Its MACD was about to make a crossing above the signal line, with the histogram profile demonstrating a decline in bearish volume.

Is Bitcoin Price demand building up?

While the price and rising open interest may be leaning in favor of the bulls, they were not the only signs. For example, Bitcoin’s spot flows have mostly been negative since the start of February. However, outflows have notably declined and this gives the bulls a chance to dominate.

Bitcoin spot flows | Source: Coinglass

It is however worth noting that spot flows were yet to demonstrate a substantial uptick. This may indicate weak demand. On the derivatives side, futures open interest bounced back above $60 billion in the last 10 days, confirming renewed interest at sub- $100,000 prices.

Still on demand build-up, exchange flows recently dropped to key levels where they pivoted twice in January. This historically significant level may offer a psychological buy back zone and exchange outflows were already higher than inflows at the time of observation.

Bitcoin Exchange flows | Source: CryptoQuant

Higher exchange outflows than inflows signal that the bulls might already be putting in some work. However, a modest gap of about 2,000 BTC between inflows and outflows may indicate that the market is still in a cautious mood.

Can Strategy inject more optimism into BTC demand?

Michael Saylor and his Strategy team have for the most part, offered a confidence boost to the market in times of doubt. The company might be about to do so once again as revealed in its latest announcement.

Strategy is reportedly planning to issue about $2 billion worth of convertible notes to purchase more BTC. The company has been taking advantage by purchasing BTC especially every time it dips below $100,000.

A $2 billion liquidity injection into BTC especially now that the bears are easing off their attack, could pave the way for recovery above $100,000. These observations may trigger enough excitement for Bitcoin to possibly achieve a net positive performance in the next 8 days.