07 Jan 2022

Massive deleveraging on Binance and Bybit

The December 4th crash sends Binance and Bybit’s share of the global open interest down towards levels not seen since May 22nd. Binance and Bybit’s combined share of the global open interest plummeted from 41% to 30%.
Source: Skew
We mentioned concerns over Bybit’s growing share of the global open interest in the bitcoin futures market last week. Large spikes in Bybit and Binance’s open interest have tended to be followed by sharp price movements in bitcoin.Saturday’s intense crash showed once again that it’s wise to be careful when the conviction is high among retail traders on Binance and Bybit.Binance saw its OI fall by 40% from $5.5 billion to $3.3 billion, and Bybit saw an even more substantial fall of 45% from $3 billion to $1.6 billion.In total, the two exchanges has experienced a $3.6 billion decline in their open interest following the crash.Both exchanges have restricted their API data on liquidations, making it difficult to estimate the overall impact of the crash. However, based on back-of-the-envelope calculations, we find that Binance’s liquidation volumes in the BTC futures likely surpassed $1 billion. We further estimated a $143m liquidation volume of Bybit, but based on the massive fall in Bybit’s OI, this is likely an underestimation.Following the crash, the market seems to be in a far healthier state. Binance and Bybit’s combined share of the open interest is back to levels not seen since late May.
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