Bitcoin Tests $39,000 Support as Open Interest Ticks Higher

4 min readApr 18, 2022

Bitcoin is fighting a fierce battle at a pivotal point of control. The coin fell trough $40,000 overnight as anticipation of a strong volatile move continues to grow.

Meanwhile, TerraUSD has dethroned BinanceUSD as the third largest stablecoin, reaching $17.5 billion in market cap.

Let’s dig in.

Dear readers,

The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service. While I cannot promise perfection I do my best to be honest and transparent.

Thank you for reading.

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UST Surpasses BUSD Becoming the Third Largest Stablecoin by Market Cap

The TerraUSD (UST) stablecoin, a product of the Luna ecosystem has overtaken Binance USD (BUSD) by market cap. Valued at $17.5 billion, UST is now only behind Tether and USD Coin, which have market caps of $82.8 billion and $49.9 billion respectively.

Read the full article here!

Technically speaking

Bitcoin Retreats Below $40,000

Bitcoin/Dollar trades at $39,000 at the time of writing, down -1.8% on the day at the time of writing as it threatens to slide to deeper levels.

The BTC/USD pair exchanges hands just above a key point of control (POC), opening the door to $36,600. However, with an acceptable weekly close of $39,600, the short-term price-action could a bear trap.

A bear-trap occurs when prices slide below key levels only to recover all the lost ground (and then some) in the hours and days ahead. The same is true of bull traps (the other way). Often times, the likelihood of such an event increases when open interest, funding rates and trend exhaustion offer confluence.

H4 Signals intra-day Reversal

On the H4 time-frame, BTC/USD fell 3.2% after low-time-frame support failed to materialise and the floor caved in.

Currently, the Relative Strength Index (RSI) is in the midst of printing a 4-hourly bullish divergence, such that price trends lower as the RSI creates a higher low. The same is true of Bitcoin on-balance volumes, which indicates decreasing volume-based transaction pressures in relation to the trend.

Additionally, the open interest to market-cap ratio ( OI/MCAP) is accelerating higher (intra-day) during a regime of strongly negative funding rates for perpetuals futures contracts. This counter-indicator explains that market participants are anticipating lower prices and are positioned for that outcome in the immediate short-term.

Locally, bulls will look to reclaim and defend the pivotal region of $39,200-$39,500. If reclaimed, a subsequent retreat from this area would make acceleration to $36,600 probable. Otherwise, a reclaim of the $40,500 pivot opens the door to $42,000 in the days ahead.

All in all, both time-frames suggest that an explosive reversal is both imminent and probable. Unless a black swan event takes the world by storm (in which case everyone will be gunning for the exits), BTC/USD is within the bounds of a high-value area in both trading and investment terms.

Needless to say, nothing is absolute, but confluence informs confidence.

p.s. This is my opinion. It is not financial advice.

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