Viewpoint: Bitcoin's current rebound is largely due to a significant increase in derivative trading activity.

On July 3rd, as per a Cointelegraph analysis article, the price of Bitcoin recently saw a surge from $105,200 to $109,500. This upward movement mainly stemmed from a notable increase in derivative trading activity, suggesting that the market momentum is on the mend. The open interest (OI) on major futures exchanges witnessed a 10% spike, amounting to approximately $3.2 billion, indicating a substantial influx of funds into the market. This growth was primarily driven by long positions, reflecting confidence in the further appreciation of the Bitcoin price. Despite the rise in price and open interest (OI), the funding rate in the perpetual contract market remains stable. This indicates a balance in sentiment between long and short traders. More importantly, the current uptrend is not being fueled by excessive leverage. From a bullish standpoint, the stable funding rate during the price increase implies that the upward trend may be more enduring. Alongside this trend, a significant short squeeze has taken place in the market, with over $196 million worth of short positions being liquidated in the past 12 hours. This intense liquidation event is likely to prompt Bitcoin to break through key resistance levels. Furthermore, the Bitcoin Coinbase Premium Index has remained elevated throughout the trend, further validating the strength of buyers. This index tracks the price differential between Coinbase and other major exchanges, suggesting that buying pressure from U.S. institutional and retail investors persists, thereby reinforcing the bullish outlook.