Bitcoin Crosses $50k, Futures Open Interest Surges

By: Isha Das

Bitcoin recently broke the $50,000 barrier marking significant recovery from November 2022. Such an upturn caused a substantial increase in open interest for futures and perpetual futures contracts (Glassnode). The latter's open interest observed an upsurge from $9.716 billion on February 1 to $12.742 billion on February 12, the highest it has been since December 2021; marking a growing speculative activity around Bitcoin.

Bitcoin's futures open interest saw a high of two years on February 12, with the value reaching $20.413 billion. The estimated futures leverage ratio augmented from 0.178 to 0.201 during the same period indicating a surge in trader risk-taking. A higher leverage ratio can amplify potential gains or losses, thus contributing to increased market volatility.

Increased activity in both perpetual and fixed-date futures contracts points to surging trading activity, potentially leading to higher liquidity in the market. The distribution of futures open interest across exchanges (with CME and Binance being leaders as of February 12) indicates significant contributions from both institutions and retail.

These findings suggest that the current trending scenario is an active and engaged futures market with bullish sentiment and increased risk-taking - factors that could continue to drive price volatility due to speculative trading and leveraged positions.