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Daily On-Chain Snap #45

Exclusive Research

Concerning sharp uptick in the percentage of bitcoin being margined raises both the probability and magnitude of cascading liquidations last seen in May

The metric above captures the percentage of futures contracts open interest that is margined in the native coin (e.g. BTC), and not in USD or a USD-pegged stablecoin.

The start of Asia trading on Thursday saw the largest daily increase in the percentage of open interest margined in bitcoin since March 2021. Namely, this period coincided with a bull run driven by excess leverage, as the percentage of bitcoin-margined maintained 67% from March to April (60-day window). More importantly, a rising rate increases the magnitude of downside volatility, as the downside scenario results in the worst-case scenario in PnL for recent market entrants. What is more interesting is that Glassnode shows only 2.27% of short-term holders are currently at a loss. However, no need to panic just yet, as the metric does not seem overheated at 53%.

Nothing in this article constitutes professional and/or financial advice. The content is provided exclusively for informational and/or educational purposes. Nothing is to be construed as an offer or a recommendation to buy or sell any type of asset. Seek independent professional advice in regards to financial, tax, legal and other matters.

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