Open interest in BTC perps reached an ATH last Friday

12 Jul 2022

Open interest in BTC perps reached an ATH last Friday

The offshore futures basis has declined below 2% as BTC once again trades below $20k after failing to breach range highs last week.

Both FTX and Binance saw a sharp and sudden decline in their futures premiums following CME’s weekend close on Friday, plunging from 2.5% to 1% as BTC began its downward trend from $22,000.

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Source: Skew *Closed Saturday - Sunday

CME’s basis has been fairly stable over the last week, oscillating around 1.5-2%. However, as the broad financial markets experienced a rough day yesterday, the CME basis saw a considerable decline on the Monday open. CME’s basis was likely helped by BITO seeing strong inflows last week. BITO’s BTC exposure has grown to an all-time high, equivalent to 33,000 BTC. However, strong BITI inflows on Monday, July 11th, contributed to offsetting the basis effect. Shorts seem to be piling in as we approach the June CPI release on Wednesday.The gap between offshore futures and CME has narrowed over the last week. Overall, yields are extremely low in the market at the moment, as the pessimistic sentiment in the market prevails.

One month of funding rates below neutral territory

The Bybit and Binance perp discount to the spot market remains sticky. Funding rates remain below neutral on Bybit and Binance, while we note a massive growth in BTC-denominated open interest in perps last week.

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Source: Skew

The average funding rate of Binance and Bybit has only been neutral on one occasion since BTC’s meltdown from $30k, confirming a prevailing cautious sentiment in BTC perps, with perps tending to trade at a discount to spot.On par with what we see elsewhere in the crypto market, the continuously low funding rates illustrate the current low yield environment in crypto. It also shows the strong bearish sentiment in the market.A Wednesday CPI print below the 8.8% expectation tomorrow might catch shorts offside, which could become an interesting catalyst for short-term positive momentum in the market.

Open interest in BTC perps surged to a new all-time high on July 8th

... and OI still remains on par with June 12th ATH as the market stays leveraged ahead of Wednesday’s CPI release.

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Source: Laevitas, Skew

BTC-denominated open interest in bitcoin perps surged last week towards a new all-time high of 351,722 BTC. The open interest quickly declined in the following days, suggesting traders realized profits as BTC traded at range highs of $22,000.The OI surge on Thursday and Friday suggests that the recovery in the market last week was driven by derivatives traders. The sharp decline in the offshore futures basis following BTC’s peak further suggests that derivatives traders drove the small recovery.