• Futures open interest (FOI) in Bitcoin has exceeded 500,000 for the first time in February.
• This increase in FOI has caused an increase in long liquidations, as investors continue to enter the positive momentum of Bitcoin’s 50% YTD gains.
• The realized volatility has also increased, adding to the price volatility and reaching its highest level since the collapse of FTX.
Futures Open Interest (FOI) Exceeds 500K BTC
The total funds allocated in open futures contracts have surpassed 500,000 Bitcoin for the first time ever this month. This is a 20,000 BTC increase from January and shows that investors are piling into futures contracts.
Long Liquidations Increase
The influx of funds have caused an increase in liquidations – mainly long liquidations – as investors continue to take advantage of Bitcoin’s 50% YTD gains.
Realized Volatility Picking Up
The realized volatility has also picked up significantly, with 70% vol being reported – its highest level since the collapse of FTX. This adds further pressure on price and increases overall market volatility.
As more investors pile into futures contracts via FOI and long liquidations, Bitcoin’s price may become more volatile and less predictable due to increased market activity. It is important for investors to remain aware of these shifts so they can make informed decisions when trading cryptocurrencies.
In conclusion, the increasing trend of FOI alongside long liquidations is putting pressure on the price and contributing to higher levels of realized volatility in Bitcoin markets throughout February 2021. Investors must stay vigilant about these changes so they can make sound trading decisions going forward.