The amount of open-ended contracts for bitcoin has decreased significantly for the cryptocurrency derivatives exchange BitMEX. In this case, the exchanges FTX and Bybit this rose.
The rate of bitcoin has grown in recent days – now BTC is trading around $6 700, showing an increase of over 75% from the low of $3 867 dollars, recorded March 12, after a sharp decline in traditional and alternative markets. Meanwhile, the total amount of unrealized contracts or outstanding positions on indefinite contracts XBT/USD fell to 55 000 BTC. This is the lowest figure in the last 18 months on BitMEX.
A perpetual futures contract offers great leverage and is a margined product. However, it has no expiry or settlement, as the classic of the future, and therefore it is trading close to the current price of the underlying asset. The exchange uses the term «open price» for the total amount of open positions in their indefinite contracts, when talking about computation in bitcoin.
The total amount of unrealized indefinite contracts XBT/USD on BitMEX. Source: Skew
In the last 12 days the total amount of unrealized contracts XBT/USD on BitMEX has fallen by more than 50%, from 115 000 to 55 000 BTC BTC. Activity decreased significantly after a sharp decline in BTC with approximately $7300 to $3867 in the middle of the month.
«The total amount of unrealized contracts decreases, because the market is full of uncertainty,» said CEO Bybit bin Zhou (Ben Zhou). «Traders in all fields, be it traditional or crypto markets just are not sure where the market is heading. Therefore, they are cautious and try to stay on the sidelines to observe the market until you see a clear entry signal».
Although market sentiment was initially bearish with downward movement intensified due to forced liquidation of long positions on BitMEX. Forced liquidation of long positions, which comes at a time of falling prices below the threshold of providing a large number of traders, about 90% of the closure of derivative contract on 12 March.
In addition, during falling markets, March 13, occurred the suspension of trading on BitMEX with a strong «slip» with the operation orders. As a result, the site paid $200 000 to the affected traders, and some members of the cryptocurrency community have suggested a possible manipulation of prices on BitMEX.
General Director of the Alameda Research and competing exchange FTX Sam Bankman-fried (Sam Bankman-Fried) has published several records on Twitter, asking about whether or not the exchange was subjected to a DDoS attack, or lower prices have contributed to the reluctance of the courts to respond to the situation on the market.
BitMEX has denied approval of Bankman-Fraida, calling them conspiracy theories. However, the dispute seems to have led to a slowdown in activity of the traders, as evidenced by the drop in the total amount of unrealized contracts.
The total amount of unrealized futures contracts on bitcoin on the exchange of FTX. Source: Skew.
Despite the fact that the amount of open positions decreased from $1.2 billion to $500 million on BitMEX after the forced liquidation of long positions, the same indicator rose sharply from competitors platforms. On FTX for the last 12 days, the amount of open contracts rose from $68 million to $128 million similarly, Bybit, this figure had increased from $35 million on March 14 to $100 million on March 22.
The global reduction in activity
However, overall activity has slowed considerably worldwide over the last five weeks. The aggregate amount of unrealized contracts decreased by 50% compared to the highs observed in mid-February, said the General Director of the Skew Emmanuel Th (Emmanuel Goh).
The aggregate amount of unrealized futures contracts on bitcoin. Source: Skew
The total amount of open positions exceeded $5 billion in mid-February, when the price of bitcoin was about $10 500. At the moment the figure is about $1.6 billion.
Given the decline of institutional activity, the recent rise in BTC prices, apparently, was triggered by the spot market, which is mainly dominated by long-term holders and retail traders. This opinion has already been expressed before by some market participants who believe that massive sale of scriptaction mainly institutional players, while retail investors are actively buying bitcoin.
Retail investors bought BTC at a price below $5,000 at the beginning of this month, according to the indicator «change in net position «Hodler»», which is tracked by the firm Glassnode.
The change in net position «Hodler». Green columns (above zero) are for BTC the «cholerae», while red bars indicate a sell. Source: Skew
The indicator showed growth of shopping during recent price declines. In the past, significant amounts of BTC were sold during the bullish rally, and the growth of new net positions among the «hollero» observed during «bear» markets, according to Adamant Capital.