With on-chain indicators reaching significantly oversold conditions, Bitcoin futures markets see all-time high leverage, with higher chances of volatility and a short squeeze bias – a sudden sharp move in the asset price, caused by the repurchase of shares from sold investors.

This week, bitcoin investors have seen six consecutive red candles, accompanied by a wave of broader market sell-offs following mounting concerns over the Federal Reserve’s austerity policy.

The wave of market sales, which occurs in a bear market, has accompanied the lack of interest from retail investors. According to Glassnode, the Hodler Net Position Change metric checks the 30-day continuous change in currency maturation. Positive (green) values ​​mean that coins are aging at a faster rate than spending.

In other words, despite the euphoria and “extreme fear” demonstrated by the Fear & Greed Index in the market, bitcoin HODLers are quietly slowing down coins spend.

spending of coins (bitcoins) over the network
To measure spending velocity, Glassnode used the Value Days Destroyed Multiple (VDD), which compares coin destruction to the annual average – Source: Glassnode

Aggressive pace leverage

In the futures markets, leverage in the bitcoin derivatives market has grown at an aggressive pace, as the on-chain analysis company signals. Since December 4, positions have grown by 42%, amounting to 264,100 BTC in derivatives on identified exchanges:

Bitcoin: Futures Open Interest Perpetual – Source: Glassnode

Leading the rapid growth of futures speculation are users of Binance, by far the largest Bitcoin futures exchange by volume and size.

Typically, periods when open leverage on futures exceeds more than 2% of market cap are short-lived and tend to end dramatically, and in either direction. Currently, this index is at 1.98%.

open futures contracts
Futures Open Interest Leverage Ratio – Source: Glassnode

Also note that as open futures contract volume reaches new highs, the daily sum of futures traded volume trend in the opposite direction. Therefore, it is still important to be alert, because if a deleveraging event occurs, in an environment of low liquidity, the movement can be amplified.

derivative volume
Bitcoin: Futures Volume – All Exchanges (14d Moving Average) – Source: Glassnode

Bitcoin futures markets are on an aggressive pace, with higher chances of volatility and a “short squeeze” bias.

The low level of low demand in the spot market – financial assets traded for immediate delivery, such as commodities, stocks, some types of bonds and foreign exchange (currency) – is confirmed by the network metrics: HODLers in accumulation and low retail interest.

You can even delve deeper into network analysis with the full report from Glassnode and also by watching Jaragua’s Weekly Summary. Stay tuned to the Cointimes Telegram group for upcoming on-chain reviews.

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