Also, the institutional market sees bleeding futures premiumsAs already mentioned, the futures basis in the offshore market reached unusually low levels this weekend.Similar dynamics unfolded on CME, leading CME’s 3mth basis to close at 1.1% on the Friday close.The futures-based ETFs are once again in a rolling week, which could lead to a compressed 1mth basis in the coming week.The futures premiums have seen a slight growth early this week but remain at extremely low levels.
Leverage is back: Open interest in BTC perpetuals approaching yearly highsThe open interest in BTC perpetuals is currently near a one-year high when denominating in BTC, after climbing steadily since early March, with more intensive growth in recent days.Currently, the open interest sits at 256,000 BTC. This is the second-highest daily OI recorded in the last 365 days, only surpassed by Jan 4th. Binance remains the biggest contributor to the open interest in perps by far and has been a significant contributor to the surge in the last few days. This comes on top of a global Binance long/short ratio slightly above 2, which is relatively common terrain on Binance and not necessarily a concern.
Also, Bybit and FTX have contributed to the recent lift. All growth in late April has been accompanied by substantially negative funding rates (next slide), suggesting that shorts are the key aggressor while also implying some capitulation from longs after this leg downward. Overall, the growth in the perp OI is worth monitoring with a close eye. As leverage is building, more aggressive moves in either direction could follow. The sentiment, funding rates, and futures basis suggest that shorts are the most confident. Thus, a short squeeze is possibly on the table.
Source: Skew, Laevitas
Funding rate regime remains neutral to negativeSentiment in perps also worsened over the last week, leading to funding rates to push into slightly negative levels.The average funding rate on Binance and Bybit reached its lowest level since March 10th on Thursday as BTC fell below $40k again.In sum, the sentiment in bitcoin derivatives is still very poor, while the perp OI is edging higher.