One area of current interest and concern is leverage in the futures market. In some cases, they help direct the market upwards or downwards. We have two important groups in the futures market:
- Institutional or CME, these are considered professional traders and see their positions with maturities within certain periods. These players' negotiations are carried out through hedges and rarely liquidated.
- The second group is retail o native cryptocurrencies, liquidations tend to happen to a greater extent in this market.
Open Interest saw an increase of around $6B for a total of $28.3B in two weeks, just below its all-time high of $31B on July 28th. Today's Leverage levels show an increase in leverages around the volatility of the FED rate cut. The institutional wing is also putting its chips on the table with conviction in the volatility of Bitcoin in the coming weeks, the difference is they are rarely liquidated (unless Bitcoin fluctuates sharply at the end of the week and the CME is not in operations)
Bitcoin Founding Rates - Investors are receiving $2M/day for holding long (bought) positions in Bitcoin futures contracts. This assumes an indicator that there is significant demand and that investors are willing to pay to hold long positions. It is not an extremely excessive value, but I do not rule out possible sharp corrections in very short periods to eliminate everyone who wants to win everything in a negotiation.
I also believe that the market can return more quickly to the upward rally after corrections by eliminating these players betting big, do you know how?
→ Through the domain of long and short liquidations it is observed that short liquidations have increased significantly by about $493 million, this is a positive sign because we can speculate possible short squeezes after a sudden drop and eliminate long and pull the price back into a more significant upward rally.
Written by Percival
