The mixture bitcoin futures open curiosity rise is barely beneath all-time ranges.
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Mixture bitcoin futures open curiosity rise is barely beneath all-time ranges made on the native bitcoin market high in April. Is that this trigger for concern?
Whereas futures open-interest and leveraged bets favoring the lengthy aspect have definitely elevated over the latest weeks with bitcoin’s feverish rally previous earlier all-time highs, there are just a few key distinctions between the market construction in April versus what we’re seeing now.
Supply: Glassnode
The most important and possibly a very powerful distinction between the derivatives market in April in comparison with right this moment is the proportion of futures-open curiosity that’s utilizing BTC as collateral to enter a place. With bitcoin spinoff markets, you’ll be able to both use BTC or stablecoins as collateral.
If you are long (directionally betting on prices to increase) using bitcoin, then if the price decreases your position P&L (profit and loss) and your collateral decrease in value in tandem, this raises the liquidation price of your position. This can result in mass-market liquidation events, similar to what happened in May following the April highs.
Thus, it holds great significance that the percentage of open interest using BTC as collateral has declined significantly since April, from a high of 70.17% to 45.04%. This is a trend we have been covering in detail since July, when we broke down some of these dynamics in The Daily Dive #028 – Structural Changes To BTC Derivatives Market.
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