Potential short squeeze amid falling Bitcoin overselling

In a recent tweet, crypto-focused analytics firm IntoTheBlock noted that a potential Bitcoin price drop could be imminent.

The analysis is based on BTC ‘s OI (Open Interest) ratio to the market capitalization of the leading cryptocurrency (OI / MC), which recently hit a year-high of around 2.25%.

According to Coinglass, the open interest of Bitcoin futures, which represents all outstanding contracts from traders, recently hit a new record high of $ 16.68 billion, with giant Binance taking 28.86% of the total. FTX and CME Group took second and third place (17.65% and 14.06%, respectively).

IntoTheBlock recalls that the OI / MC ratio also increased amid the Bitcoin price drop in July 2021, the month when Bitcoin fell to $ 29,400 before the uptrend resumed.

The analysis company therefore assumes that a similar scenario will occur at this point in time.

https://twitter.com/intotheblock/status/1479880842524643339?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow noopener
“Potential short squeeze is coming. The Bitcoin OI / MC ratio has reached its highest level in over a year. The last time the OI / MC ratio rose while Bitcoin price fell was in July 2021 when BTC bottomed out. “

BTC is currently well on its way to a third straight month, down 11% from the month. It currently changes hands at $ 41,889 on major exchanges.

Extreme fear and oversold conditions

On January 7, the Relative Strength Index (RSI) on BTC ‘s daily chart fell below 30 for the first time since May 17, suggesting that the largest cryptocurrency is oversold.

Source: TradingView

On January 8, BTC ‘s “fear and greed” index fell to 10.

Source: alternative.me

The cops may not get out of the way. Galaxy Digital CEO Mike Novogratz recently predicted that the price of the largest cryptocurrency could hit $ 38,000, which is the lower range of an important area of ​​support.

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