Since October’s liquidation event, Bitcoin perpetual futures open interest has remained under 310K BTC, indicating lower leverage and diminished speculative activities.
Overview
- According to Glassnode data, BTC perpetual futures open interest has struggled to exceed approximately 310K BTC following an October reset in leverage.
- Funding rates are on a downward trend, indicating reduced confidence in leveraged long positions and a hesitance among traders to pay extra for potential upside exposure.
- The lack of activity in perpetuals points to a more subdued, risk-averse derivatives environment that could lessen volatility compared to previous phases of the market cycle.
In a social media post on platform X, Glassnode’s senior researcher CryptoVizArt described the perpetual futures market as a “ghost town,” referencing data that showcases a downturn in trading activity and leverage.
Decline in Bitcoin Perpetuals
Open Interest, which indicates the total outstanding positions on centralized derivatives platforms, saw a significant drop in October following a decrease in Bitcoin’s price, per the analysis. This metric evaluates the cumulative value of open futures contracts across various exchanges.
Post the October liquidation, Open Interest remained near lows before experiencing a slight rise in mid-November, coinciding with Bitcoin’s continued price decline. The metric peaked in line with what has so far marked the bottom of the cryptocurrency’s price trajectory, according to the data.
Since reaching that peak, Open Interest has again dropped, nearing the same low levels witnessed after the October liquidation, as per the analysis.
The decline in speculative engagement correlates with a reduced perpetual futures Funding Rate, which measures the periodic fees exchanged between holders of short and long positions. The Funding Rate has shown a prolonged decline, according to Glassnode’s insights.
“This ongoing decrease underscores a drop in conviction for leveraged long positions, with traders hesitant to incur additional costs for maintaining potential upside exposure,” the Glassnode researcher noted in the post.
Typically, an increase in Open Interest signals that investors are entering new positions with fresh leverage, which can amplify price fluctuations. In contrast, decreasing Open Interest indicates that traders are exiting positions or facing liquidation, potentially yielding a more stable pricing environment as leverage leaves the market.
