Bitcoin Rebounds Strongly, Perpetual Futures Active
Bitcoin has experienced a significant rally, surpassing $68,000 and leading to a surge in perpetual futures activity. This surge in prices has brought relief to Short-Term Holders (STH), with 75% of their coins now in profit, as reported by Glassnode Insights.
Perpetual Futures Market Analysis
The perpetual futures markets, known for their high liquidity in digital asset trading, have witnessed increased activity. Dominated by Binance, Bybit, and OKX, these markets make up around 84% of the total open interest. Glassnode has introduced a new model to monitor the leverage and open interest sensitivity in relation to changes in the spot Bitcoin price.
- Open interest in perpetual futures has ranged from 220,000 to 240,000 BTC throughout this year.
- Since early June, this range has expanded to 260,000 to 280,000 BTC, indicating a higher speculative appetite.
- Major exchanges have seen significant shifts in open interest, often due to margin call liquidations of overly leveraged traders.
Identifying Market Pivot Points
Glassnode’s analysis identifies pivot points in the perpetual market, characterized by significant reductions in open interest due to liquidations. Over the past year, there have been ten such deleveraging events, leading to noticeable decreases in open interest.
- A recent sell-off to $55,000 triggered a substantial long liquidation event, resulting in a steep drop in open interest across key exchanges.
- The perpetual funding rate, indicating the directional bias of positions, revealed weakening demand for long positions since the market peak in March 2024.
Impact on Short-Term Holders
The recent surge in prices has had a positive effect on Short-Term Holders, who represent new demand and recent buyers. While over 90% of their supply was at a loss in late July, the rally has returned 75% of their held supply to an unrealized profit. The Short-Term Holder MVRV metric, measuring profitability, has now surpassed the break-even level of 1.0.
- Analysis by age breakdowns shows that all sub-groups of recent buyers have returned to positive profitability, likely boosting overall investor sentiment.
Net Realized Profit/Loss Examination
Evaluating the net realized profit/loss for each sub-cohort reveals positive improvements, with most age groups experiencing favorable capital flows. The 1-month to 3-month cohort is an exception, bearing the impact of recent price actions.
Overview and Conclusions
Perpetual futures markets continue to be vital within digital asset platforms. While a drop in BTC price to $53,000 led to a significant deleveraging event, the subsequent recovery has put a majority of Short-Term Holders back into unrealized profits, supported by net positive capital inflows in recent periods.
Disclaimer: This report does not offer investment advice. All data serves informational and educational purposes only. Users should make their investment decisions independently.
Exchange balances are sourced from Glassnode’s address label database, combining published exchange data and proprietary algorithms. While efforts are made for accuracy, numbers may not always reflect an exchange’s reserves. Users should exercise caution.
Hot Take 🚀
Bitcoin’s recent price rally and perpetual futures activity indicate a dynamic market environment, with Short-Term Holders benefiting from the uptrend. Understanding these market dynamics and their impact on different investor groups is crucial for navigating the evolving crypto landscape. Stay informed, stay strategic, and tread wisely in the ever-changing world of digital assets!
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