Bitcoin's price rose 8% between October 14 and 15, and is up 11% over the past 30 days, outpacing the S&P 500's 3.8% gain over the same period.
However, some traders are concerned that the rapid increase in leveraged demand for Bitcoin could pose risks.
Bitcoin Futures Demand Hits Highest Peak Since 2023
Total open interest (OI) in Bitcoin futures — a measure of the total number of outstanding BTC futures contracts — shows a sharp increase in leverage demand, causing concern among many investors. High open interest can increase the risk of multiple liquidations during sudden price movements, leading traders to predict that market volatility will increase further.
Volatility is often an indicator of past behavior, meaning traders tend to wait for days with strong price moves before opening additional positions. This delayed reaction may explain the increased use of leverage, as participants feel more confident after witnessing large price moves.
Bitcoin Futures OI Summary | Source: CoinGlass
According to the data, the number of Bitcoin futures contracts reached 566,270 on October 15, the highest level since January 2023. In USD terms, open interest now stands at $38 billion, just 2.5% below the all-time high on March 28, 2024, indicating a marked increase in the demand for leverage through BTC derivatives.
Given the strong performance, it is understandable that Bitcoin investors are adding to their positions through derivatives contracts. Additionally, the $810 million net inflow into US-listed Bitcoin spot ETFs from October 11 to 14 has fueled the bullish sentiment, indicating growing institutional interest.
In this context, investors often view the increase in demand for Bitcoin futures as a sign of bullish sentiment. However, it is important to remember that every derivative contract requires both buyers and sellers. To determine whether the recent pressure is due to leveraged demand from buyers (longs) or sellers (shorts), it is necessary to look at the spreads of Bitcoin futures contracts.
Monthly Bitcoin futures contracts often incur costs due to long settlement times, and sellers typically demand a premium of 5% to 10% annually to compensate for this delay.
Annual premium for Bitcoin futures. Source: TradingView
On October 15, the Bitcoin futures spread reached 10% as the Bitcoin price surged to $67,885, but the indicator has yet to cross the threshold that signals a bull market. In other words, despite the sudden surge in leveraged demand from buyers, the overall market structure of Bitcoin remains balanced between buyers and sellers.
That said, the data does not rule out the possibility that some traders may be using excessive leverage, which could lead to liquidations. However, given the 8.6% volatility of Bitcoin’s price on October 15 and the fact that derivatives exchanges were forced to liquidate less than $70 million in futures positions, it suggests that traders are managing their leverage prudently.
Therefore, despite the high open interest in Bitcoin futures, the likelihood of mass liquidation in the short term remains relatively low.
Conclude
The sharp increase in Bitcoin futures open interest coupled with the BTC price increase suggests that bullish sentiment is spreading among investors, especially as the demand for leverage has reached a one-year high. Despite the positive signs in the market, investors should still be cautious of the potential risks of over-leveraging, which can lead to successive liquidations when prices fluctuate sharply.
However, with the increase in capital inflows into Bitcoin spot ETFs, especially from large institutions, it can be seen that Bitcoin is being appreciated and continues to attract market attention.
Source: https://tapchibitcoin.io/lai-suat-mo-bitcoin-tang-vot-len-muc-cao-khi-btc-len-68000.html
