Bitcoin perpetual futures open interest has remained below 310,000 BTC since the October liquidation, indicating muted leverage and weaker speculative activity.
Summary
- Data from Glassnode shows that BTC perpetual futures open interest has failed to recover above around 310,000 BTC since a leverage reset in October.
- Funding rates have moved lower, reflecting declining long conviction and traders’ reluctance to pay a premium for upside exposure.
- The ‘ghost town’ in perpetuals indicates a calmer, less risky derivatives environment that can dampen volatility relative to earlier phases of the cycle.
The Bitcoin (BTC) perpetual futures market has experienced a significant drop in speculative activity, with Open Interest remaining at suppressed levels, according to analysis from blockchain analytics firm Glassnode.
In a post on social media platform characterized the perpetual futures market as a “ghost town,” citing data showing reduced trading activity and leverage.
Bitcoin offenders continue to decline
Open Interest, which measures the total number of open positions on centralized derivatives platforms, saw a sharp decline in October following a decline in the price of Bitcoin, according to the analysis. The metric tracks the total value of outstanding futures contracts on exchanges.
After the liquidation in October, Open Interest remained near a low before experiencing a brief rise in mid-November as the price of Bitcoin continued to fall. According to the data, the indicator peaked next to what has served as the cryptocurrency’s price floor so far.
Since that peak, Open Interest has fallen again and is approaching the same low levels seen after the liquidation in October, the analysis shows.
The decline in speculative participation coincided with a decline in the perpetual futures Funding Rate, which tracks the periodic fees exchanged between holders of short and long positions. According to Glassnode data, the funding rate has been declining for quite some time.
“This continued decline reflects a decline in long leveraged beliefs, with traders unwilling to pay a premium to maintain upside exposure,” the Glassnode researcher said in the post.
Rising open interest typically indicates that investors are opening new positions with new leverage, which can increase price volatility. Conversely, declining Open Interest indicates that traders are closing their positions or liquidating, potentially leading to more stable price action as leverage is removed from the market.
