- Stablecoin reserves on derivatives fairs have risen.
- Until the Stablecoin volume flows to Spothandel again, the volatility is expected to continue to exist.
Since November there has been a significant increase in StableCoins range, coinciding with Bitcoin’s [BTC] Bullish Rally.
However, this liquidity has mainly flowed to derivatives markets instead of spot markets.
This report analyzes the implications of this trend. Is the market surpassed and can excessive trade with high leverage Bitcoin’s price in the short term to jeopardize?
Livered bets are at the forefront when using the Stablecoin
A growing stablecoin range usually indicates increased purchasing power. However, its derivation to derivatives suggests that traders prefer lifting tree positions over direct BTC accumulation.
Since November, traders have added around $ 20 billion to Tether (USDT) to the circulation, coinciding with Bitcoin’s climb to all time of $ 109k.
Source: Cryptuquant
While this increase in USDT lividity pointed to the market, especially at BTC buying pressure, facts From cryptoquant revealed that much of this liquidity was led to risky leverage.
While the Derivatenmarkt saw a peak in buy orders, Open interest (OI) increased Until a record high of $ 70 billion on January 22.
Currently it is $ 52 billion. The closure of these positions has put intense downward pressure on the BTC price, making it a challenge for Bitcoin to reclaim the $ 90k marking.
Weak spot demand endangers the future of Bitcoin
The USDT movement This shift shows clearly on election day. On November 6, the net stream of Stablecoins from Spotbeurzen marked increased purchase activity – usually a bearish indicator.
However, the derivatives market saw an explosive inflow of 1.2 billion in USDT, pointing to an increase in leverage.
Although such liquidity inflow in derivatives can indicate a bullish sentiment in a strong market, they introduce a considerable risk in a volatile environment.
After the FOMC meeting, which led to slightly optimism for potential speed reductions, the estimated lever ratio of Bitcoin (ELR) saw a dramatic increase.
Source: Cryptuquant
As the expectations for lower loan costs grew, traders flowed to high leverage positions. This trend is one to keep closely as Q2 progresses.
Given the weak accumulation on the spot market, these lifting tree positions are confronted with a greater chance of liquidation.
In this environment, the intake of Stablecoin can continue to dominate the market for derivatives. Pushing Bitcoin past the $ 90k threshold can become an important challenge.