Bitcoin Futures Interest Hits Year-to-Date Low, Indicating Shift to Stablecoins

In the world of cryptocurrency, the last few days have been marked by a series of important developments that are worth discussing. According to data by Glassnode, the total amount of funds allocated in open futures contracts has hit an all-time low of roughly 400,000 Bitcoin, which is nearly 250,000 BTC less than November 2022. This suggests that investors are increasingly turning to stablecoins and the US dollar, with approximately 70% of the allocation being made in these currencies.

Data by Glassnode: Open Interest in Futures Contracts
Data by Glassnode: Futures Open Interest Margined in Crypto

One notable trend that has emerged is the decline in crypto-backed margin, which is now at an all-time low of around 30% allocation. This indicates that investors are increasingly adopting a risk-off approach to investing in Bitcoin, and may be seeking more stable alternatives as a result. While this could take away some of the volatility associated with Bitcoin, it could also limit the potential for substantial gains.

Understanding Bitcoin’s Recent Price Correction: Two Factors at Play and Reasons for Cautious Optimism

In related news, data by CryptoQuant indicates that there were two reasons for the recent correction in Bitcoin’s price. Firstly, short-term holders of Bitcoin cashed out their profits as the profit ratio rose above 5%. This resulted in a decline in Bitcoin’s price as it had increased beyond the realized price of the 1m-3m age band, which usually indicates the price trend and short-term momentum. Secondly, some miners transferred their Bitcoins to exchanges in early March.

Despite these developments, on-chain data still suggests a cautiously optimistic outlook for Bitcoin for several reasons. Firstly, the spending of large Bitcoin holders, known as “whales,” has remained relatively low compared to other price corrections since late 2022.

Secondly, the holdings of Bitcoin whales have increased to their highest level since November 30, 2022, as large BTC holders continue to add to their holdings.

Thirdly, the Inter-exchange Flow Pulse (IFP) indicates the early stages of a bull market, with momentum turning positive again according to the indicator’s positive 7-day % change.

Lastly, the Bull/Bear Market Cycle Indicator remains in the bull territory, and the On-chain P&L Index momentum has entered more sustainable levels.

Traders in the derivative markets also hold positive sentiments and are willing to pay to open new long positions with a funding rate above zero, which further supports a bullish outlook for Bitcoin in the coming weeks and months. While there may be some short-term volatility in the market, these indicators suggest that Bitcoin is still a solid investment for those looking to get involved in the world of cryptocurrency.

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