Summary
- The proportion of Bitcoin futures backed by cryptocurrency has plummeted to approximately 12%, a stark decline from nearly 100% during 2019-2020.
- Recently, Bitcoin surged from about $57,000 to close the week near $79,175, marking a 1.88% increase today.
- In the last 24 hours, liquidations reached $570.08 million, with short positions being affected more severely than long ones.
Traders in Bitcoin futures have largely moved away from using cryptocurrency as collateral. Currently, crypto-margined Bitcoin open interest stands at roughly 12% across all exchanges, as reported by Glassnode's long-term analysis.
This represents a significant drop from the situation in 2019 and 2020, when crypto-margined contracts constituted nearly the entire market. For the majority of the last decade, if you initiated a Bitcoin futures position, it was typically backed by Bitcoin itself.
Myriad: When will Bitcoin reach a new all-time high? Make your prediction here.A crypto-margined position uses the asset you are trading as collateral, which means a price drop reduces your margin precisely when the trade turns against you, creating a feedback loop that can lead to a margin call during volatile market movements. In contrast, stablecoin-margined positions are denominated in dollars, preserving collateral value even as trading conditions fluctuate.
Traders appear to favor this more stable option.
The shift towards stablecoins reflects the maturation of the overall derivatives market. Coinbase recently launched U.K. derivatives trading through Hyperliquid, offering up to 50x leverage. Additionally, Bitcoin ETFs attracted $854 million in just five days as expectations of interest rate hikes diminished, and Strategy reduced its Bitcoin holdings. These are all indicators of institutional investment trends that prefer dollar-denominated assets over cryptocurrencies.