Binance's Ether Futures See Lowest Open Interest Since July 2022

Don't ready too much into the move, said one observer, calling it a typical position reset.

AccessTimeIconAug 24, 2023 at 12:59 p.m. UTC

The U.S. dollar value locked in the active ether perpetual futures contracts listed on Binance has tanked to a 13-month low.

The so-called notional open interest was $1.41 billion at press time, the lowest since July 2022, according to data tracked by Coinglass. Binance is the world's largest digital asset exchange by trading volume and by open interest in both spot and futures markets.

The notional value in ether futures on Binance has declined by 35% in one week, consistent with the market-wide leverage washout seen since last Thursday; the notional open interest in the exchange's bitcoin perpetual futures has slid 17% to $3.02 billion over that same period.

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

Ether's global estimated leverage ratio, calculated by dividing the dollar value locked in the active open perpetual futures contracts by the total number of coins held by derivatives exchanges, has declined from a multi-month high of 0.28 to 0.22. Bitcoin's ratio has slid from 0.27 to 0.21, the lowest since May, according to data tracked by South Korea-based analytics firm CryptoQuant.

It shows that the degree of leverage deployed to magnify returns is significantly lower than a week ago. It also means a lower probability of liquidations-driven volatility in the coming weeks.

"Don't read much into the recent move; it was exceptionally low liquidity + leverage liquidation," lan Solot, co-head of digital assets at Marex Solutions, said in an email. "Technicians will draw lines and commentators will peddle their preconceived views. But it was a typical positioning reset, especially for BTC. Moving on."

Edited by Stephen Alpher.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.