Bitcoin
Decline in Crypto Margined Futures Signals Shift to Stable Collateral
Highlights in the chain
DEFINITION: The percentage of open futures contracts margined in the native currency (e.g. BTC) and not in US dollars or a stablecoin pegged to the US dollar.
The Bitcoin futures market is undergoing a notable shift, as reflected in the decreasing percentage of crypto-margined futures open interest across all exchanges. Data from Glassnode highlights a significant drop in the use of Bitcoin as collateral for futures contracts, falling from 70% in early 2021 to less than 20% in mid-2024.
Crypto Margined Futures Open Interest Percentage: (Source: Glassnode)
That trend suggests a growing preference for more stable forms of collateral, such as US dollars or stablecoins, rather than Bitcoin itself. The rationale behind this move is to mitigate heightened risks associated with Bitcoin price volatility, which can lead to increased liquidations during market swings. This movement towards stability and risk mitigation signals a maturation market, where traders are adopting strategies to manage volatility more effectively.
Furthermore, the futures market response to Bitcoin’s price stabilizing around $70,000 indicates an evolving scenario where open interest is starting to recover. This recovery in open interest, coupled with the continued shift to stable collateral, highlights the changing behavior of traders and market forces.