Journalist
Posted:
- Traders in the Bitcoin futures market are doubtful about a possible price increase
- This has led them to reduce risk exposure by cutting back on leverage BTC transactions with cash
Like Bitcoin [BTC] As traders become increasingly less confident in positive price action in the short term, the estimated coin leverage ratio for cash BTC Futures continues to decline. This is evident from a new report Through pseudonymous CryptoQuant analyst Phi Deltalytics.
BTC’s estimated leverage ratio for cash-settled futures tracks how much leverage is used in the currency’s cash-settled futures market. It is calculated by dividing the total dollar value of Open Interest in BTC Cash Futures contracts by the total market capitalization of the coin.
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According to Phi, BTC Futures market participants have become increasingly wary of using leverage (borrowed money) to trade the currency’s Futures markets. Especially since it is still facing significant resistance around the $30,000 price point.
Source: CryptoQuant
At the time of writing, the coin was trading for $26,669, according to data from CoinMarketCap. In fact, BTC has been stuck within the narrow price range of $25,000 – $28,000 since April.
A glimmer of hope?
As traders have reduced their leveraged trades in BTC cash transactions, the total number of open positions in the coin’s futures markets has increased.
BTC Open Interest started rising again on September 4, after falling to a two-month low following the August 17 deleveraging. Valued at $11.14 billion at the time of writing, the coin’s Open Interest has grown 10% since then. This indicated the return of traders who had previously exited the market due to the liquidity flood.
Source: Coinglass
When an asset’s Open Interest increases in this way, it indicates an increase in the total number of outstanding contracts or positions that have not yet been closed by a buyer or a seller. It often indicates increased trading activity and participation in the market, with the number of new positions being created increasing.
Read Bitcoin’s [BTC] Price forecast 2023-2024
Despite the coin’s limited price movements and recent headwinds that have seen the crypto trading below $26,000, funding rates on cryptocurrency exchanges have remained significantly positive. This is evident from data from Mint glass.
Source: Coinglass
Since the beginning of the year, the only period when traders massively shorted BTC was on August 18, following the capital flight that occurred the day before. The currency’s funding rates fell to a year-to-date low of -0.017%.
As the market gradually recovered, BTC funding rates turned positive and have remained so ever since. This is a sign that traders have started placing bets again in favor of a price increase.