Bitcoin futures open interest sees biggest drop in a year in the middle of market volatility James Van Straten · 1 month ago
Insights Bitcoin
Sharp decrease in BTC open interest marks go back to much healthier market levels.
Quick Take
On Aug. 5, international markets experienced wild volatility, triggering an in-depth evaluation of trading volumes to determine the effect. An essential procedure was futures open interest, representing the overall USD worth designated in open futures agreements. Throughout this duration, Bitcoin (BTC) costs dropped from around $58,000 to $49,000. To precisely determine this, open interest in BTC terms was analyzed to prevent cost impact. It exposed a substantial decrease from 536,000 BTC to 492,000 BTC, marking among the biggest unfavorable spikes in open interest in the previous 2 years and the most significant considering that August 2023, according to Glassnode.
Futures Open Interest Daily Change: (Source: Glassnode)
In addition, the overall open interest in futures agreements margined in USD dropped drastically. At the start of the month, this figure was around 350,000 BTC however plunged to 308,000 BTC on Aug. 5, suggesting a significant take advantage of wipeout. This huge decrease in leveraged positions highlights the marketplace's response to the sharp rate decrease.
Futures Open Interest Cash-Margined: (Source: Glassnode)
Another important metric, open interest divided by market cap, has actually now settled closer to 2%. Historically, this level is thought about healthy, recommending the marketplace is not overleveraged, a plain contrast to the previous couple of months. This metric shows a go back to stability, indicating that the current volatility may have assisted cool off the marketplace, making it more well balanced and less vulnerable to severe changes in the near term.
Open Interest divided by market cap: (Source: Glassnode)Latest InsightsLatest Alpha Market Report » …
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