Note
When Bitcoin futures open interest declines, traders are closing their positions, which can be due to several reasons: reduced market activity, potential trend reversal, profit taking/uncertainty, and lower confidence in the Bitcoin price trend. Regardless of the reason for the decline, lower Bitcoin futures open interest generally results in fewer outstanding contracts, weakening bullish momentum, reducing leverage, reducing volatility, and in some cases increasing selling pressure.Earlier, the Bitcoin market had been deleveraging since mid-February, with over $10 billion in notes being liquidated during a massive liquidation of leveraged positions. Notably, this has always provided BTC traders with good and profitable short- and medium-term opportunities in the past. When BTC rallied towards its ATH in mid-January, the Bitcoin Futures Perpetual Funding Rate d to 0.035% (highest since Dec 5, 2024), indicating that long traders were regularly paying short traders. However, high optimism eventually led to an overheated market and triggered a price reversal accompanied by widespread liquidations. With widespread liquidations, the long bias weakened and the futures market witnessed an easing of cash and carry trades. Significant outflows from spot bitcoin exchange-traded funds (ETFs) and futures contracts on the Chicago Mercantile Exchange (CME) ended, increasing selling pressure into the spot market, reflecting a shift in positioning.
While lower bitcoin futures open interest is typically accompanied by lower volatility due to reduced leverage, spot bitcoin ETFs can amplify short-term volatility compared to the low liquidity of futures markets.
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✔Copy accurate trading signals✔Manage accounts🎁Stable profit of more than 188.6% per week🎁Success rate is as high as 97.85%, real-time communication: @cryptoanalyst_baker Signal entry: t.me/FcCygjylf
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.