Risk appetite strengthened across the crypto market as Bitcoin reached $86,500. Bitcoin’s share of total cryptocurrency market capitalization approached 60%, while growing derivatives positions highlighted traders’ bullish expectations. However, the recovery in leverage also brought potential losses from a price reversal into focus.
Bitcoin open interest rises by $2.3 billion
According to CoinGlass data, Bitcoin open interest increased from approximately 626,000 BTC to 653,000 BTC starting September 30. That represents an additional 27,000 BTC, worth roughly $2.3 billion, in outstanding positions.
The increase of approximately 4.3% brought total open interest to $56.2 billion. Over the same period, Bitcoin’s price climbed from around $83,500 to $86,500.
Open interest measures the total number of outstanding futures contracts that have not yet been closed or settled. An increase alongside rising prices suggests new positions are accompanying the rally; it does not, on its own, mean all those positions are bullish.
Funding rates reflect bullish expectations
Rising funding rates in perpetual futures also indicate that buyers are taking on more risk. When funding is positive, traders holding long positions pay those holding short positions.
Higher funding may suggest that traders are willing to bear greater costs to maintain their bullish positions. However, the recovery in open interest followed levels seen in late September that were close to a one-year low.
The starting point therefore matters when assessing the recent increase. More expensive long positions can leave leveraged traders more vulnerable to a sudden price decline.
Bitcoin’s market share approaches 60%
Bitcoin’s dominance also stood out in the spot market. The largest cryptocurrency’s share of total market capitalization approached 60%, while the share held by dollar-pegged USDT slipped to approximately 6.3%.
This pattern may suggest that investors are becoming more comfortable taking risks. However, a decline in USDT’s market share does not, by itself, show how much money has left stablecoins; rising valuations elsewhere in the crypto market can also push the ratio lower.
Several altcoins joined Bitcoin’s advance. Ethereum, XRP, Solana and BNB rose, while SKY, AAVE and APT stood out among the 100 largest cryptocurrencies by market capitalization, gaining between 7% and 10%.
The picture shows that rising altcoin prices and increasing Bitcoin dominance can occur simultaneously. Because dominance measures relative market capitalization, faster growth in Bitcoin’s value can increase its share even as other assets post gains.
U.S. employment data falls short of expectations
The market activity began before the release of the U.S. employment report on October 2. The subsequent figures showed that nonfarm payrolls increased by 29,000 in September, below expectations of 90,000.
The unemployment rate rose from 4.1% to 4.2%. August’s payroll gain was also revised down from 162,000 to 133,000.
The weaker employment picture was viewed as potentially giving the Federal Reserve room to hold interest rates steady despite elevated inflation. Alongside strengthening crypto demand, the direction of monetary policy therefore remained in focus for investors.
