Over the last month we have seen heightened volatility in the market as Bitcoin consolidates just below $45,000. The most noteworthy period of this consolidation took place last week on January 3rd, as the entire market underwent a liquidation cascade, potentially driven by a headline eluding to Bitcoin ETFs potentially getting denied by the SEC. This led to over a billion dollars of open interest being wiped on Bitcoin perpetual futures and several billion dollars on altcoin perpetual futures open interest. Shown below, we can see that although price has almost fully retraced the decline, interestingly open interest and funding rates have both yet to recover.
We also can see the decline and similar wipeout in quarterly futures, shown below by the 3 month futures basis (difference between spot and contract price). Currently the 3 month futures basis sits just below 14% annualized, down from over 20% last week.
Meanwhile, shifting over to the CME, futures open interest remains north of $5 billion. With the basis for CME futures still sitting at roughly 15% annualized, the questions remains of whether these (presumably traditional finance firms) will look to offload these positions into a potential ETF announcement this week.
Shifting over to cumulative return by geographic trading sessions, we can see that US trading hours continue to lead the way, with EU trading sessions clearly lagging behind.
Conclusion: The last month has been a period of consolidation for the leading digital asset. With many being concerned about the ETF announcement being sell the news and froth in the futures market that could accelerate such flows, last week's futures market liquidation cascade, reflected by both perpetual futures and 3 month futures data, may alleviate some of these worries. With that being said, over $5 billion dollars of futures open interest on the CME still remains at a basis of 15% annualized. A bear case could be made that the unwinding of this would cause significant sell pressure for the market, however it is unclear why these participants wouldn't have begun to unwind these positions already with the final ETF deadline just 3 days out. We expect the coming week to have immense volatility.
Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
Over the last month we have seen heightened volatility in the market as Bitcoin consolidates just below $45,000. The most noteworthy period of this consolidation took place last week on January 3rd, as the entire market underwent a liquidation cascade, potentially driven by a headline eluding to Bitcoin ETFs potentially getting denied by the SEC. This led to over a billion dollars of open interest being wiped on Bitcoin perpetual futures and several billion dollars on altcoin perpetual futures open interest. Shown below, we can see that although price has almost fully retraced the decline, interestingly open interest and funding rates have both yet to recover.
We also can see the decline and similar wipeout in quarterly futures, shown below by the 3 month futures basis (difference between spot and contract price). Currently the 3 month futures basis sits just below 14% annualized, down from over 20% last week.
Meanwhile, shifting over to the CME, futures open interest remains north of $5 billion. With the basis for CME futures still sitting at roughly 15% annualized, the questions remains of whether these (presumably traditional finance firms) will look to offload these positions into a potential ETF announcement this week.
Shifting over to cumulative return by geographic trading sessions, we can see that US trading hours continue to lead the way, with EU trading sessions clearly lagging behind.
Conclusion: The last month has been a period of consolidation for the leading digital asset. With many being concerned about the ETF announcement being sell the news and froth in the futures market that could accelerate such flows, last week's futures market liquidation cascade, reflected by both perpetual futures and 3 month futures data, may alleviate some of these worries. With that being said, over $5 billion dollars of futures open interest on the CME still remains at a basis of 15% annualized. A bear case could be made that the unwinding of this would cause significant sell pressure for the market, however it is unclear why these participants wouldn't have begun to unwind these positions already with the final ETF deadline just 3 days out. We expect the coming week to have immense volatility.
Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
Over the last month we have seen heightened volatility in the market as Bitcoin consolidates just below $45,000. The most noteworthy period of this consolidation took place last week on January 3rd, as the entire market underwent a liquidation cascade, potentially driven by a headline eluding to Bitcoin ETFs potentially getting denied by the SEC. This led to over a billion dollars of open interest being wiped on Bitcoin perpetual futures and several billion dollars on altcoin perpetual futures open interest. Shown below, we can see that although price has almost fully retraced the decline, interestingly open interest and funding rates have both yet to recover.
We also can see the decline and similar wipeout in quarterly futures, shown below by the 3 month futures basis (difference between spot and contract price). Currently the 3 month futures basis sits just below 14% annualized, down from over 20% last week.
Meanwhile, shifting over to the CME, futures open interest remains north of $5 billion. With the basis for CME futures still sitting at roughly 15% annualized, the questions remains of whether these (presumably traditional finance firms) will look to offload these positions into a potential ETF announcement this week.
Shifting over to cumulative return by geographic trading sessions, we can see that US trading hours continue to lead the way, with EU trading sessions clearly lagging behind.
Conclusion: The last month has been a period of consolidation for the leading digital asset. With many being concerned about the ETF announcement being sell the news and froth in the futures market that could accelerate such flows, last week's futures market liquidation cascade, reflected by both perpetual futures and 3 month futures data, may alleviate some of these worries. With that being said, over $5 billion dollars of futures open interest on the CME still remains at a basis of 15% annualized. A bear case could be made that the unwinding of this would cause significant sell pressure for the market, however it is unclear why these participants wouldn't have begun to unwind these positions already with the final ETF deadline just 3 days out. We expect the coming week to have immense volatility.
Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
