Is a retail frenzy causing the Bitcoin futures' markets excessive leverage?
Retail seems to be causing Bitcoin futures markets' excessive leverage, but pro traders remain neutral. Bitcoin (BTC) has breached the $50,000 level on Feb. 16. But while failing to cleanly break the psychological barrier, it undoubtedly displayed the potential for even higher valuations.Meanwhile, futures and options indicators are misaligned, signaling excessive buyers' leverage, while options markets remain calm. After analyzing both markets, one might theorize what has caused this apparent incongruence.Options skew remained neutral-to-positiveWhen analyzing options, the 25% delta skew....
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Bitcoin may be en route to retest underlying support levels but the record $22.5 billion open interest on BTC futures shows bulls expect the uptrend to continue. Bitcoin (BTC) price has rallied 22.5% in March, but as the price moved up, some buyers began to use excessive leverage, according to derivatives data. Meanwhile, futures open interest reached a $22.5 billion record-high, causing investors to question how sustainable the current rally is.Being optimistic, especially during a bullish market, can't be deemed worrisome. Still, a yellow flag is raised when buyers use excessive leverage....
Most traders think futures contracts are only used to place ultra risky high leverage bets, but the instruments actually have a variety of uses. Whenever there's data out on futures contracts liquidation, many novice investors and analysts instinctively conclude that it's degenerate gamblers using high leverage or other risky instruments. There's no doubt that some derivatives exchanges are known for incentivizing retail trading to use excessive leverage, but that does not account for the entire derivatives market.Recently, concerned investors like Nithin Kamath, the founder and CEO at....
Crypto analytics provider Glassnode argues the late February BTC crash may have been a healthy reset that flushed excessive leverage out of the market. According to on-chain analytics provider, Glassnode, the late-February crypto market correction may have purged excessive leverage from the markets.On March 1, Glassnode published a report analyzing the recent crypto crash — which was only the second significant crypto correction since the markets pushed into new record highs in late 2020.Glassnode noted the crash peaked with a 25% fall from the local top of $58,300 to $43,343. As such, the....
A stable funding rate paired with a record-high $20.3 billion open interest on BTC futures suggest that the current rally has room to extend higher. After hitting a $43,000 local low on Feb. 28, Bitcoin (BTC) price rallied 28% to retake the $57,000 level on Mar. 10. As the Feb. 21 to Feb. 23 massive $5.9 billion liquidations caused by excessive long leverage seem long gone, futures contracts reached a $20.3 billion all-time high.This time, as Bitcoin rallied to $57,000, there seems to be no signs of retail FOMO (fear of missing out) buying, at least from the perspective of futures and....
The open interest on Ethereum futures hit a record $6.5 billion as ETH rallied to $1,750 and traders increased their leverage. Ether (ETH) price has rallied by 33% over the last five days and data shows that as this occurred some buyers began to use excessive leverage. Although this is not necessarily negative, it should be considered a yellow flag as a higher premium on futures contracts for short periods is normal.ETH/USD 4-hour chart. Source: TradingViewAlthough Ether’s upward movement has been going for an extended period, it was only in February that Ether finally broke the $1,500....