Bitcoin

April

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<p style="text-align: justify">You can also read this news on COINTURK NEWS: <a href="https://en.coin-turk.com/bitcoin-market-dynamics-and-futures-trading-insights/" data-wpel-link="internal">Bitcoin Market Dynamics and Futures Trading Insights</a><br></p>
<p class="p1" style="text-align: justify"><strong>Bitcoin</strong> reached the $53,000 level on February 20th and briefly exceeded $52,900 before a correction occurred due to $50 million in long liquidations in the futures market. Despite a drop to $50,750, the open interest in Bitcoin futures remained at $23.7 billion, just 2.5% below the all-time high seen in April 2021.</p> 
<h2 class="p1" style="text-align: justify" id="what-s-happening-with-bitcoin">What’s Happening with Bitcoin?</h2> 
<p class="p1" style="text-align: justify">In April 2021, open interest peaked at $24.3 billion but failed to break the $64,900 resistance, leading to a 27% correction within 11 days. With the current strong demand for Bitcoin futures contracts, investors are pondering the likelihood of a similar outcome.</p> 
<p class="p1" style="text-align: justify"><img loading="lazy" loading="lazy" decoding="async" class="aligncenter wp-image-317415 size-full" src="https://coin-turk.com/wp-content/uploads/2024/02/btc-futures.webp" alt="" width="1248" height="501"></p> 
<p class="p1" style="text-align: justify">Some investors argue that the increase in open interest for Bitcoin futures signals excessive leverage, but this is not universally true. Every futures transaction requires a buyer and seller of equal size, and an investor can be fully hedged even when using leverage, such as buying a monthly Bitcoin futures contract and simultaneously selling an equivalent amount of perpetual contracts if there’s an appropriate price difference.</p> 
<h2 class="p1" style="text-align: justify" id="key-details-on-bitcoin-futures">Key Details on Bitcoin Futures</h2> 
<p class="p1" style="text-align: justify">The record high open interest of $24.3 billion does not carry significant weight on its own. In 2021, supported by individual investor inflow, <a href="https://en.coin-turk.com/binance-contacts-low-liquidity-altcoin-projects-raises-concerns-about-token-contributions-to-savings-products/" data-wpel-link="internal">Binance</a> led the market share in Bitcoin futures, while currently, the dominance primarily lies with CME, which is largely composed of institutional investors. These data do not eliminate the possibility of a sharp Bitcoin price correction driven by futures markets but do reduce the likelihood.</p> 
<p class="p1" style="text-align: justify">It could be argued that high open interest increases the potential for cascading liquidations, which is a valid point. However, significant leverage in the system is required for such conditions to occur, which is less likely with CME contracts that require a 50% deposit margin. Similarly, Deribit investors tend to adopt a less risky approach compared to Bybit, leading to different liquidation levels. Essentially, aggregating all Bitcoin futures open interest into a single pool lacks logical consistency.</p> 
<p class="p1" style="text-align: justify">Regardless of the leverage used, the optimism of professional investors can be assessed by examining the premium on Bitcoin futures contracts. In normal markets, these contracts should trade at 5% to 10% higher than normal spot markets to account for the extended settlement periods.</p> 
<p class="p1" style="text-align: justify"><img loading="lazy" loading="lazy" decoding="async" class="aligncenter wp-image-317414 size-full" src="https://coin-turk.com/wp-content/uploads/2024/02/btc-veri-2.webp" alt="" width="1289" height="523"></p> 
<p class="p1" style="text-align: justify">The premium of the fixed monthly contract for Bitcoin, known as the basis rate, peaked at 17% on February 20th as the price approached $53,000. Currently, the indicator is at 14%, indicating that the drop to $50,750 has not diminished the bullish trend. The fact that these figures are calculated annually and that the cost of carrying a leveraged long position for a month is 1.1% is noteworthy.</p> 
<h5><span style="font-weight:bold;font-size:16px">The post first appeared on COINTURK NEWS: </span> <a href="https://en.coin-turk.com/bitcoin-market-dynamics-and-futures-trading-insights/" data-wpel-link="internal">Bitcoin Market Dynamics and Futures Trading Insights</a></h5>

Bitcoin Market Dynamics and Futures Trading Insights

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