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Ether Futures Open Interest on Binance Reaches Lowest Point Since July 2022

Aug 24, 2023 at 04:32 pm

Don't read too much into the recent development, cautioned an observer, deeming it a routine adjustment of positions.

Binance ETH Futures Open Interest (Coinglass)Binance ETH Futures Open Interest (Coinglass)

The value of the U.S. dollar locked within active ether perpetual futures contracts, which are listed on Binance, has plummeted to its lowest point in 13 months. The so-called notional open interest stood at $1.41 billion at the time of reporting, marking the lowest figure since July 2022. This data was compiled by Coinglass. Binance ranks as the world's largest digital asset exchange in terms of trading volume and open interest across both spot and futures markets.

Within a week, the notional value of ether futures on Binance has experienced a 35% decline. This aligns with the market-wide trend of deleveraging that has been evident since the previous Thursday. Over the same span, the notional open interest in Binance's bitcoin perpetual futures has dropped by 17%, settling at $3.02 billion.

In a recent weekly market update, Reflexivity Research noted, "On the bright side, this excess leverage in the derivatives market has now been flushed out of the system."

The global estimated leverage ratio for Ether, a calculation involving the division of the dollar value locked in active open perpetual futures contracts by the total number of coins held by derivatives exchanges, has slipped from a multi-month peak of 0.28 to 0.22. Similarly, Bitcoin's ratio has descended from 0.27 to 0.21, marking the lowest point since May. These figures stem from data monitored by CryptoQuant, an analytics firm based in South Korea.

This shift indicates that the extent of leverage employed to amplify returns is notably lower than it was just a week ago. Consequently, the likelihood of volatility driven by liquidations in the forthcoming weeks has diminished.

"Don't attach excessive significance to the recent shift; it resulted from unusually low liquidity combined with leverage liquidation," remarked Ian Solot, co-head of digital assets at Marex Solutions, in an email. "Technicians may draw conclusions, and commentators might assert their pre-established viewpoints. Nonetheless, this was a standard repositioning, particularly for BTC. Let's move forward."

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