The futures and derivatives market on Bitcoin is witnessing drastic changes since the beginning of the year. While the volume and open interest has increased across all platforms with the increase in price. There are a few alarming signals for the bulls as well.
The long interest at BitFinex has dropped by 38.2% from 47,500 to below $30,000 contracts in only a fortnight.
The closing of contracts with the rise is price is indicating the profit taking or closing of the orders at par prices placed during November and December.
The difference between long and short orders had reached an ATH in December above 43,500 contracts. Currently, the difference has dropped by more than 20k contracts since the beginning of the year. Nevertheless, it is still higher than it was around the peak of the 2017 bull run.
Other Crypto Derivatives Exchanges
While the long interest at Bifinex is high, the majority of volume is at Binance, BitMEX, Huobi and Okex. Moreover, the bullish sentiments in the market over-all seems to be intact with BitMEX funding rate shooting positive since 14th January.
On Okex, the Open Interest (OI) has increased since the past few days. However, the BTC basis which was consistently around $10-20 since the past couple of months has dropped below $5.
The Open Interest at CME is increased by 3 folds since the beginning of the year, with Bakkt projecting similar rise. The launch of Options market at these exchanges seems to injecting volatility in the market as well.
On Huobi, the Open Interest shot up by 50% in the past two days. The elite trader position is in the favor of bulls at 52% vs. 47%. However, the number of traders are predominantly short with a ratio of 1.4.
The massive shifts and introduction of new products in the derivatives market suggest that the volatility is expected to remain high in the near future. The weekly closing to CME contracts is also due tomorrow.
Do you think markets will continue bullish trends in the new paradigm? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com