Bitcoin trades near $86,000 as futures open interest drops $1.4 billion

Derivatives market sees reduced activity

Futures open interest for Bitcoin declined from $38.0 billion to $36.6 billion last week, which marks a $1.4 billion drop. Open interest represents the total value of active futures contracts and serves as an indicator of traders’ market exposure. The decrease signals a cooling in speculative positioning that had built up during Bitcoin’s price breakout two weeks prior.

Options open interest also fell following the quarterly expiry, further underscoring the reduction in derivatives market activity. Last Monday saw significant selling in perpetual futures leading to a price dip, but this pressure faded as the week progressed.

Not all participants retreated, however, as long-side funding payments in perpetual futures climbed from $926,400 to $1.5 million, indicating continued appetite for leveraged long positions.

Futures open interest dropped to $36.6 billion, returning to Glassnode’s statistical range but staying near its upper limit. Demand for bullish exposure in perpetual contracts increased, as seen in higher funding rates.

Spot trading activity showed increased buyer presence. The cumulative volume delta, which tracks the balance between buyer- and seller-initiated trades, swung from negative $102.8 million to positive $33.2 million. This signals that buyer-driven trades outpaced seller-driven ones during the week, even if it does not directly measure new capital inflows.

Exchange-traded fund (ETF) demand remained in positive territory, with net inflows for the week. Nevertheless, the magnitude of these inflows diminished compared to the surge seen previously, and ETF trading volumes hovered near the lower end of historical ranges.

On-chain metrics reflect active market environment

Several on-chain measures showed heightened Bitcoin network activity. Glassnode’s Hot Capital Share, which tracks the portion of capital that has recently moved, increased from 18.9% to 19.5%, suggesting active capital rotation.

The ratio of supply held by short-term holders compared to long-term holders climbed from 13.7% to 14.2%. In Glassnode’s methodology, coins held for less than 155 days are classified as short-term, while those held longer are long-term. Typically, short-term holders are more likely to sell during periods of volatility, affecting price dynamics.

Mini dictionary: Hot Capital Share, an on-chain indicator tracking the proportion of coins or capital that have recently moved, often used to measure investor activity and market sentiment shifts.

Network activity remained robust, as active addresses, fee levels, and transfer volume all exceeded their high bands. The monthly change in realized cap stayed well above average, reflecting consistent inflows of new capital into the market.

Profitability indicators stayed elevated as well. Nearly 75% of Bitcoin’s supply was in profit, according to Glassnode, and both unrealized gains and realized profit-taking among short-term holders were well above historical averages.

Active on-chain indicators, including the ETF MVRV ratio, showed the average ETF investor holds a substantial unrealized profit, while most Bitcoin supply remains in positive territory.

Bitcoin was last reported trading at $85,987, representing a 0.17% gain over 24 hours. Over the past week, the price has climbed 2.64%, and it is up 7.54% compared to 30 days earlier.