Bitcoin Open Interest Reaches New Lows
Recent data from Glassnode reveals that Bitcoin (BTC) open interest (OI) has plummeted to its lowest level since August, currently sitting at 413,000 BTC, which is approximately $36 billion. Open interest refers to the total funds tied up in outstanding futures contracts, serving as a key indicator of the leverage present within the Bitcoin ecosystem. As these contracts are dollar-denominated, their value is subject to fluctuations based on Bitcoin’s market price. To provide a clearer perspective, we can assess open interest in terms of Bitcoin itself, which helps to eliminate price-induced distortions.
According to Glassnode, since November, Bitcoin’s open interest has declined significantly from 546,000 BTC to 413,000 BTC across all trading platforms. A considerable portion of this decrease is attributed to the unwinding of open interest specifically on the Chicago Mercantile Exchange (CME), especially in relation to basis trading. During this period, Bitcoin’s price has also experienced notable changes, dropping from $109,000 to a low of $78,000 before recovering to around $90,000. This suggests that much of the recent price increase has been primarily driven by spot market activity rather than by leverage.
Moreover, Binance, which ranks as the second-largest exchange by open interest, has reported a decline in its open interest to a 12-month low of just over 100,000 BTC. This drop indicates a significant reduction in leverage from the retail perspective, reflecting a marked decrease in speculative trading activity. This decline can be linked to the extreme price volatility Bitcoin has experienced over recent months.
In addition, it’s noteworthy that open interest as a percentage of Bitcoin’s market capitalization has fallen below 2% for the first time since February 2024. This metric underscores the sharp decline in both speculation and leverage within the market, highlighting a trend towards more cautious trading practices among investors.
Open Interest divided by Market Cap (Glassnode)
