Bitcoin Rallies, Spot Trading Volume Increases Threefold

During the Bitcoin (BTC) rally, open interest (OI) has decreased while spot trading volume has surged to about three times the average of the last 30 days. Analyst Murphy stated that this price increase is attributed more to the liquidation of existing short positions and spot buying rather than the expansion of new leverage. OI represents the size of derivative positions that have been liquidated or not settled at expiration; an increase in this figure indicates a larger number of positions in the market but does not necessarily reflect a betting advantage for either upward or downward movements. Murphy explained that if futures longs were leading the rise, it would be typical for both OI and funding rates to increase together, but he noted that there is no indication of large-scale new leverage entering the market during this rally. The spot relative trading volume (SRV) on exchanges recorded 2.94 from August 19 to 20, reaching about three times the recent 30-day average. Murphy explained that similar expansions in spot trading volume over the past two years have mainly occurred during fear-induced sell-offs in bear markets or during bullish phases. However, he did not conclude this as a definitive trend reversal, mentioning that the current spot demand is a potential signal that has emerged for the first time since entering a bear market. While prices are testing the short-term holder realized price (STH-RP), he added that this alone is insufficient to confirm a directional change.