1 min read.Updated: 13 Jul 2021, 01:16 PM ISTLivemint
Since the sell-off in May, futures open interest has remained bound between $10.7 billion and $13.0 billion with only a handful of notable builds or declines within that range
NEW DELHI: With over 50% drop in derivatives since May, the direction of the next large move is likely to strongly reflect underlying supply and demand, rather than a speculative premium or discount, according to a note by blockchain data provider Glassnode.
Since the sell-off in May, futures open interest has remained bound between $10.7 billion and $13.0 billion with only a handful of notable builds or declines within that range. Open interest remained 57% below the all-time high set in April as cryptocurrency exchange Coinbase went public.
As per Glassnode note, volumes across futures markets are also in decline, falling back to $45 billion traded per day.
“These volume levels were last seen in Q1 2021 where prices were trading in a similar range ($29,000 to $38,000). This puts current volumes 62.5% and 49% lower than the May and June capitulations, respectively," the note added.
Options markets are experiencing a similar slow-down, with open interest falling by over 67% since typical highs of $13.2 billion in March and April. Current options open interest is at $4.4 billion, returning to December 2020 levels.
“With such a significant decline across all derivatives markets, it becomes increasingly likely that market volatility will be driven by spot volumes, rather than short/long squeezes or leveraged liquidations," Glassnode added.
The note also said that there were early signs of recovery in bitcoin mining activity. As per Glassnode data, the hash-rate recovered from the peak-trough decline of 55% to around a 39% decline last week.
Meanwhile, a note by digital asset manager CoinShares showed that digital asset investment products saw minor outflows totaling $4 million last week in what was the quietest trading week since October 2020.
“Minor outflows were seen in bitcoin totaling $7 million last week while trading volumes in investment products totaled just $1.58 billion for the whole week, the lowest since October 2020," the asset manager said in a note.
Ethereum saw very minor inflows totaling $0.8 million while Binance and Cardano saw inflows of $0.4 million and $0.6 million, respectively.
Multi-asset investment products were the most popular last week with inflows totaling $1.2 million.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!