After hitting the local low of $ 43,000 on February 28, the price of Bitcoin (BTC) rose 28% to resume the $ 57,000 level on March 10. , futures contracts reached a record high of US $ 20.3 billion.
This time, with Bitcoin rising to $ 57,000, there seems to be no signs of buying at FOMO retail (fear of losing), at least from the perspective of futures and volume indicators.
While the borrowing rate has stabilized at a neutral level, cash volumes have stagnated, signaling that the recent growth of the futures contract portfolio is healthy.
As shown above, open interest on aggregate futures on BTC has soared to a new record of $ 20.3 billion. This event is generally perceived as high, although purchases and short positions are matched all the time. However, a yellow flag should be raised whenever an increase in this metric is followed by a high rate of financing in perpetual futures.
The financing rate is neutral for n
Perpetual futures are the preferred instrument for retail leverage traders due to their liquidity and hassle-free maturity management.
To maintain a balanced exposure to risk, derivatives exchanges charge a perpetual long-term purchase rate (buyers) or short selling rate (sellers) every eight hours. Known as the financing rate, this indicator will be positive when those purchased are the ones that demand the most leverage.
Insufficient margin longs are generally liquidated as their positions are forcibly closed, so excessive leverage is the primary catalyst for substantial price corrections.
As illustrated above, the 8-hour rate reached 0.20% at the end of February, equivalent to 19.7% per month. This rate is quite expensive for those who buy in perpetual futures, but the effect disappeared when Bitcoin’s price fell below $ 48,000 on February 22.
On the other hand, the current financing rate of 0.05% for 8 hours is standard and expected in healthy markets. This indicator is equivalent to a monthly rate of 4.6% and should not be a problem for long leveraged companies.
Spot exchange volume did not increase
If the retail FOMO had taken action when Bitcoin approached its historic record of $ 58,300, spot foreign exchange volumes would have been positively impacted.
As shown above, the most recent $ 8 billion 5-day volume average is practically stable compared to the past few weeks. Thus, there is no evidence of retail investors desperately buying BTC or perpetual futures contracts.
These data suggest space for a greater appreciation of the price of Bitcoin, as institutional clients continue to stack BTC strongly, regardless of their 70% gain in the year.
While several analysts may suggest that this activity would trigger quick purchases from retail investors, there is no definitive proof of that at the moment.
The Digital Currency Group’s decision to buy $ 250 million in Bitcoin Trust shares in grayscale is likely to bring some relief, and the same can be said for the next release of the JPMorgan crypto exposure basket.
These developments can be interpreted by retailers as a ‘seal of approval’ from one of the largest banks in the world.
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