Funding for Crypto-based Derivatives Goes Negative
According to data collated by analytics company CryptoQuant from many major exchanges, the cost of borrowing to acquire crypto on leverage has plummeted to the point of being slightly negative. This suggests that the need for money to undertake leveraged bets has dwindled. Investors aren't in a hurry to increase their holdings.
Open Interest on Bitcoin Futures and Ethereum has Decreased Marginally
According to analytics site Skew.com, the open interest for Bitcoin is $16 billion, dropping from just short of $19 billion before the holidays in December. In November, open interest in bitcoin peaked at $26 billion and has decreased significantly.
The smaller ether futures market's open interest has been hovering around $8 billion since its November record of $13 billion. Currently, Bitcoin options have a market capitalization of $7 billion, whereas ether has a market capitalization of $5 billion. Those values were roughly $10 billion and $7 billion, respectively, in December 2021.
Part of the decline may be attributable to year-end wagers placed into 2021. Although present OIs for both cryptocurrencies are much higher than last year, they are still around where they were in October, before the price surge.
January has been Bloody for Bitcoin and the Cryptocurrency Market
Presumed volume for the crypto derivatives markets determined from option premiums reflects that the market's perception of future risk is at its lowest since October 2020. To be sure, normal levels of crypto assumed volatilities might suggest worry and panic in the equities market. Still, the crypto presumed volume has been trending down since the second week of December. That decrease has intensified in the last several days.
This doesn't imply that the markets will remain quiet forever, but one should not be shocked if prices begin to fall in the following days or weeks.