Bitcoin’s sudden move of $ 11,500 caused the liquidation of more than $ 1.64 billion of BTC futures. This whopping 8.5% of the total $ 19.5 billion open contract (OI), coincidentally has just hit an all-time high.
While these are important numbers, they are proportionally lower than the $ 1 billion futures contract liquidation on November 26, 2020. At the time, a 16% correction after Bitcoin’s price tested a low of $ 16,300 resulted in a 17% drop in OI.
Before yesterday’s big price move, investors’ positive expectations regarding Bitcoin remained unshaken, as neither the funding rates of futures contracts nor the 25% delta deviation of options contracts were present. warning sign.
OI reduced by 8%
As the chart above shows, the fall in BTC futures price and OI did not affect Bitcoin’s long-term growth. Between January 19 and 23, the index fell 20 percent, but it only took two weeks to recover to $ 13 billion.
OI changes stronger when traders use excessive leverage. When this happens, normal price movements will cause mass liquidations, reducing the amount of OI.
Buy-offs kept steady, indicating a healthy market
By measuring the premium of the futures contract against the current spot, it can be inferred whether professional traders are inclined to an up or down trend. Usually, the markets display a slightly positive annual rate, a situation known as a “hold-off compensation”.
Though the spread has decreased after hitting 5.7% on Feb. 17, it has since dropped to 3.5% – on average. Considering that there are 31 days left until the March 26 expiration, which means the annual rate of 50% is hugely increased.
According to previous reports, the funding rate for permanent contracts has exceeded 2.5% per week. As a result, arbitrage tables are likely to pay a hefty spread fee on March contracts to benefit from the spread.
The 25% delta deviation of the options market remains optimistic
A 25% delta deviation measures how neutral to bullish call options are valued against equivalent discount options.
This indicator acts as a measure of option traders’ fear and greed and it is currently at -6%, meaning that protection on the upside will be more expensive. This further confirms that the top market makers and traders are optimistic.
Major indicators continue to favor the bulls
Yesterday’s price action may surprise new market entrants, but those who remember when Bitcoin’s price dropped $ 11,200 between Jan. 10 and 11 will know that these drastic moves are not possible. considered out of the norm, especially considering Bitcoin’s 6-day volatility at 5.1%.
The data shows that the traders who bought the prices down yesterday are likely to win. Bitcoin’s positive news flow and institutional investors’ increasing interest in BTC will likely only increase after the price retest $ 48,000 yesterday.