The research division of a prominent cryptocurrency exchange is advising traders to closely monitor open interest (OI) while engaging with altcoins.

In their recent Alpha research report, Bitfinex highlights that a decline in OI has significantly benefited several altcoins, notably SUI and AAVE, which have surged dramatically.

“We attribute this surge to a risk-on sentiment and the ease of trading altcoins, facilitated by the drop in altcoin OI. This is partly why altcoins like SUI and AAVE have experienced a 100 percent increase since their lows in August and September.”

However, a worrisome trend has emerged in the altcoin market: OI has reached a new high of $11.48 billion, surpassing the previous peak of $10.74 billion recorded on August 19. This rise occurs despite the OTHERS index (which excludes the top 10 coins by market capitalization) failing to establish new highs.

With Bitcoin (BTC) spearheading a market rally, Bitfinex cautions that a consolidation phase may be on the horizon following an unsuccessful attempt to break through the $65,000 mark.

“Given the 22 percent increase we’ve observed in BTC, we recommend a cautious approach. It’s likely that the price could settle into a new range around current levels, leading to a consolidation period similar to past rallies, which began with spot buying but were later influenced by perpetual and futures market activities…”

Consequently, Bitfinex anticipates a potential “correction” in the altcoin markets, which they define as any altcoins outside the top 10 by market capitalization.

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