U.S. Dollar Value Locked in Ether Futures Contracts on Binance Hits 13-Month Low

Breaking Down the Decline in U.S. Dollar Value Locked in Ether Perpetual Futures on Binance

One observer has dismissed the recent decline in the U.S. dollar value locked in active ether perpetual futures contracts listed on Binance, calling it a typical position reset. However, this decline is significant and has reached a 13-month low, with notional open interest at $1.41 billion, the lowest since July 2022.

Key Points:

The notional value in ether futures on Binance has decreased by 35% in one week, following a market-wide leverage washout.
The notional open interest in bitcoin perpetual futures on Binance has also fallen by 17% to $3.02 billion over the same period.
The excess leverage in the derivatives market has been flushed out, according to Reflexivity Research.
The global estimated leverage ratio for ether has declined from 0.28 to 0.22, while bitcoin’s ratio has slid from 0.27 to 0.21.
This decrease in leverage means a lower probability of liquidations-driven volatility in the coming weeks.

Lan Solot, co-head of digital assets at Marex Solutions, has emphasized that the recent move should not be overanalyzed. He attributes it to exceptionally low liquidity and leverage liquidation, stating that it was a typical positioning reset, particularly for BTC.

Hot Take:

The decline in the U.S. dollar value locked in ether perpetual futures on Binance reflects a market-wide leverage washout and a decrease in excess leverage. While some may draw technical analysis and offer their opinions, it is important to understand that this move was a typical reset and not indicative of a major shift in the crypto market.