According to foreign media, the current size of the futures market in bitcoin is already clearly ahead of the stamina. According to Coinglass, BTC futures contracts are estimated at $48 billion, with 24-hour trades of about $25 billion over the same period, which means that there is a large amount of storage in the market, but the real liquidity of the futures is insufficient.
Holder's above the cut.
Unsettled contracts reflect the total amount of open space in the market and the volume of trade represents the size of the contract that actually changes hands over time. According to the article, during the period 2019 to 2020, the turnover was usually 2 to 3 times greater than that of unsettled contracts, and the difference between the two has now been reversed, showing a marked increase in futures market space density.
In the event of the departure of the old warehouse and the taking over of the new warehouse, the contract for the unsettled contract would not necessarily decline. Therefore, the higher OI often means that the market is more focused. By contrast, the turnover is more reflective of the ability of the market to absorb the purchase and sale in a short period of time.
Liquidation could magnify the drop.
According to the article, the real risk lies in mechanical squeeze. A large number of contracts may be centrally closed in a short period of time in the event of sudden-onset catalytic factors, in particular passive silos triggered by inadequate bonds. If day-to-day transactions are not sufficient to absorb such shocks, price volatility may be rapidly magnified.
In its report, Glassnode, a chain-based analyst, stated that when an open contract is significantly higher than a day-to-day exchange, liquidation is more difficult to absorb by the market, and adverse price fluctuations are easier to extend. The Agency also indicated that while many of the new risk exposures are currently high, there is no spot demand in the market to match them.
We've got a spot-buyer to support the thinning.
Glassnode also mentioned that the low-value purchase belt that supported the summer zone had become significantly thin when it peaked at the beginning of July, about a third lower than before. This means that if the BTC retests the low point of about $5.88 million in June, the low recipient may be less than the previous one.
In addition to the internal futures structure, the gap between spot and futures is widening. The data in the text show that the BTC 24-hour spot is about $12.55 billion, significantly below $25 billion in futures. Shortfalls tend to increase the volatility of derivatives.
At the time of the submission, the BTC price was around $6.35 million, increasing by about 1 per cent in the day. According to the article, the market surface remains relatively calm, but the current silo and liquidity structure could further increase price volatility if it is followed by a concentrated silo.