Surge Alert: Bitcoin’s Futures Basis Climbs To New Heights, What This Means For BTC

Bitcoin’s futures market is showcasing signs that have historically signalled bullish sentiment. Analysts are turning their attention to the Bitcoin futures basis—a metric representing the differential between the futures price of Bitcoin and its spot price.

Recent data has revealed that this basis has escalated to unprecedented levels since Bitcoin’s all-time high of $69,000 in November 2021.

Bullish Indications From Bitcoin Futures

Deribit’s Chief Commercial Officer, Luuk Strijers, has highlighted the current state of the Bitcoin futures basis, which ranges between 18% to 25% annually, a rate reminiscent of the market conditions in 2021.

According to Strijers’s comment, this elevated basis is not just a number but a lucrative opportunity for derivatives traders.

Bitcoin Futures Premium Above The Index Price.

By engaging in trades that involve buying Bitcoin in the spot market and simultaneously selling futures contracts at a premium, traders can secure a “dollar gain” that will materialize at the contract’s expiry, irrespective of Bitcoin’s price volatility.

Strijers further noted that this strategy is particularly appealing in the current climate, fueled by the influx of new investments following the approval of Bitcoin ETFs and anticipation surrounding the Bitcoin halving event.

The significance of the heightened futures basis extends beyond the mechanics of derivatives trading. It further reflects broader market optimism, “bolstered” by recent regulatory approvals and macroeconomic factors influencing cryptocurrency.

The disparity between Bitcoin’s spot and futures prices suggests a confident market outlook, propelled by the anticipation of continued investment inflows and the impact of the upcoming Bitcoin halving.

Such conditions create a fertile ground for Bitcoin’s value to surge, as historical precedents have often linked bullish futures basis rates with periods of substantial price appreciation.

Market Sentiment And Halving Cycles

While Bitcoin’s current market performance exhibits a bearish trajectory, with a 3.9% dip bringing its price to $68,203, market analysts advise against interpreting this as a negative signal. Rekt Capital, a respected figure in crypto analysis, views the recent price correction as a “positive adjustment” preceding the much-anticipated Bitcoin halving in April.

Bitcoin (BTC) price chart on TradingView

Halving events, which reduce the block reward for miners, thus slowing the rate of new Bitcoin entering circulation, have traditionally catalyzed significant price rallies due to the resulting supply constraints.

Rekt Capital’s analysis parallels current market movements and historical patterns observed in previous halving cycles.

According to the analyst, despite the swift pace of these cycles, they exhibit a consistent sequence of a pre-halving rally followed by a retracement phase—both of which align with Bitcoin’s current trajectory. This cyclical perspective suggests that the recent dip is merely a temporary setback, setting the stage for the next bullish phase post-halving.

Featured image from Unsplash, Chart from TradingView

Bitcoin Volatility Induces $700 Million Carnage In Crypto Futures

Data shows the cryptocurrency futures market has seen liquidations amounting to $700 million in the past day as Bitcoin has gone through its volatility.

Bitcoin Has Seen Intense Price Action In Past 24 Hours

The past day has been a bit of a rollercoaster for Bitcoin, with the asset registering sharp price action in both directions but ultimately going up as the bulls win out.

The chart below shows what the price action for the cryptocurrency has looked like recently.

Bitcoin Price Chart

From the graph, it’s visible that Bitcoin initially witnessed some sharp bullish momentum, in which the coin not only broke above the $60,000 level, but went up to touch the $64,000 mark.

This high, which is the peak for the year so far, only lasted briefly, however, as BTC crashed down spectacularly to under the $59,000 mark. The asset has since recovered to higher levels, now floating around $62,700.

The rest of the cryptocurrency sector has also gone through its volatility, with prices fluctuating across the coins. As is usually the case with such sharp price action, the futures market has suffered many liquidations.

Crypto Futures Market Has Gone Through A Squeeze In The Past Day

According to data from CoinGlass, the cryptocurrency futures market has witnessed the liquidation of contracts worth more than $700 million in the last 24 hours.

The table below displays the relevant information about the liquidations.

Bitcoin & Crypto Liquidations

It would appear that only $131 million of the liquidations came within twelve hours, suggesting that most of the flush was situated inside the preceding half-day period. This makes sense, as Bitcoin was most volatile inside this window.

It also seems that the long-to-short ratio in this liquidation event has been quite balanced, even though the price has increased in the past day. This would suggest that some aggressive longing occurred as Bitcoin approached $64,000, and the subsequent pullback wiped these top buyers.

The table below shows how the distribution has looked for the various symbols.

Bitcoin & Other Cryptos

As is generally the case, Bitcoin futures contracts have again been responsible for the largest portion of the total market liquidations, contributing around $270 million.

What’s different this time, however, is that this share, although the largest, isn’t even half the total liquidations. This could come down to the fact that speculators may now be playing around with altcoin positions after gaining confidence from the BTC price surge.

Dogecoin, the best performer among the top coins with its 34% jump, has occupied the largest share among the alts, with almost $51 million in liquidations.

When Will Bitcoin Downtrend End? This Signal Could Be One To Watch

An analyst has explained that a futures market signal could be one to wait for before the latest Bitcoin drawdown can finish.

Bitcoin Funding Rates Are Still In The Positive Territory

As pointed out by an analyst in a CryptoQuant Quicktake post, the BTC funding rate has been reducing recently, but it’s still at positive levels. The “funding rate” refers to an indicator that keeps track of the amount of periodic fee that futures contract holders are exchanging between each other currently.

When the value of this metric is positive, it means that the long traders are paying a premium to the short holders right now in order to hold onto their positions. Such a trend suggests that a bullish mentality is dominant in the futures market.

On the other hand, the indicator being negative implies a bearish sentiment may be shared by the majority of the traders as the shorts are outweighing the longs at the moment.

Now, here is a chart that shows the trend in the Bitcoin funding rate over the past year:

Bitcoin Funding Rates

As displayed in the above graph, the Bitcoin funding rate has been almost entirely positive since mid-October, suggesting that the longs have been the dominant force in the sector.

Around the start of the year, the metric’s value had hit especially high levels, but after all the volatile price action BTC has seen since then, the indicator has considerably cooled off.

The funding rates have still been at positive levels recently, however, implying that traders haven’t given up on their bullish sentiment just yet. This may not entirely be ideal for the asset to rebound.

According to the quant, for the ongoing Bitcoin downtrend to end, “we need to wait for a capitulation signal from market participants.” In the chart, the analyst has highlighted the last few instances such a capitulation signal appeared for the cryptocurrency.

Such negative spikes for the funding rate imply that the traders have become overly pessimistic about the market. Historically, BTC has tended to move against the expectations of the majority, so it’s not surprising that bottoms have been more likely to form when the traders have been highly bearish about the asset.

Red spikes in the indicator like those shown in the chart may not always perfectly coincide with a low in the price, but they are still nonetheless a sign that tides could change for the coin.

At present, the Bitcoin funding rates are still at positive levels, so some more downtrend may need to occur in the price, before these longs are liquidated and the futures balance shifts towards the other side.

BTC Price

Bitcoin had plunged under the $39,000 mark just yesterday, but the coin appears to have bounced back today as it’s now once again floating above $40,000.

Bitcoin Price Chart

Crypto Futures Razed To Ground As $659 Million Rekt With Bitcoin Crash

Data shows the cryptocurrency futures sector has gone through a mass liquidation event in the past 24 hours as Bitcoin has witnessed a sharp crash.

Crypto Futures Liquidations Have Added Up To $659 Million In Past Day

The cryptocurrency market has seen sharp price action during the past 24 hours. As is usually the case during such volatility, chaos has occurred on the futures side of the sector.

According to data from CoinGlass, almost $660 million in futures contracts have found liquidation on the last day.

Bitcoin & Crypto Liquidations

Liquidation” here naturally refers to the process that any contract undergoes when it racks up losses equivalent to a specific percentage of the position (which may differ between platforms). The exchange has to close it forcibly.

The above table shows that the longs took the brunt of this liquidation flush, as they saw contracts worth about $568 million decimated. This equals about 86% of the total liquidations in the past day.

The forceful closures have been so lopsided due to the sector observing a sharp drawdown following Bitcoin’s crash that took its price to as low as $41,500.

It’s also visible in the table that about $613 million of the total liquidations came during the last twelve hours alone, which again lines up with price action as that’s when the market was most volatile.

Regarding the individual contributions from each of the different symbols, it’s no surprise that Bitcoin-related contracts occupied the largest share of the liquidations at about $148 million.

Bitcoin Futures

Generally, though, BTC makes up for a huge part of the total market liquidations, but this time, the asset’s percentage share isn’t too extraordinary. Ethereum (ETH) and Solana (SOL) are the next biggest contributors to the squeeze, with about $111 million and $34 million in liquidations, respectively.

Historically, mass liquidation events like the one seen today haven’t exactly been a rare sight in the cryptocurrency sector due to the high volatility that most coins display on the regular and extreme amounts of leverage being easily accessible in many exchanges.

Recently, the interest in the derivatives side of the sector has become especially pronounced, as CryptoQuant Netherlands community manager Maartunn has talked about in a recent post on X.

Bitcoin Spot & Futures Volume

As displayed in the graph, the Bitcoin futures volume has generally been higher than the spot volume during the last few years, but the gap between the two especially widened during the second half of 2023.

The indicator’s value saw some decline in the last couple of months of the year, but the recent values of the metric have still been quite high compared to the norm in the past.

Bitcoin Price

Bitcoin has seen some recovery since its initial crash, as the asset is now trading around the $42,700 mark.

Bitcoin Price Chart

What to Expect From Bitcoin in 2024

Expectations that U.S. regulators will approve spot bitcoin ETFs next year are driving prices higher. History suggests we might see a slowdown as we approach the halving in April 2024, says Path Crypto’s David Liang.

$113 Million In Longs Get Rekt As Bitcoin Plunges Back To $34,000

Data shows the cryptocurrency longs have taken a beating today because of the plunge towards $34,000 that Bitcoin has observed.

Cryptocurrency Futures Market Has Seen Liquidations Totaling $137 Million Today

According to data from CoinGlass, a large amount of liquidations have taken place in the cryptocurrency futures market during the past day. “Liquidation” here refers to a forced closure of a futures contract being done by the derivative contract with which said position is open.

A contract is liquidated when it amasses losses equal to a certain percentage of the margin (that is, the initial collateral that the holder had put forth when opening the contract).

As it’s easy for traders’ bets to fail during volatile periods, it’s not surprising that the volatility from the past day has induced liquidations throughout the market. The below table shows the data for the liquidations that have occurred in the sector during the last day.

Crypto and Bitcoin Liquidations

As you can see, the cryptocurrency futures market has seen liquidations amounting to about $137 million in the past day. Out of these, around $113 million of the contracts were long positions.

This means that more than 82% of the liquidation flush in this period has involved the long holders. This is consistent with the price action, as most of the liquidations have been triggered by a plunge in the Bitcoin price from above $35,400 to the $34,000 mark.

Such large liquidation events are popularly called “squeezes.” Since the squeeze from the last 24 hours has seen the longs on the losing side, the event was a “long squeeze.”

As the below table displays, Bitcoin-related contracts have unsurprisingly contributed the most towards this latest squeeze.

Bitcoin Flush

Bitcoin saw $40 million in futures liquidations, while Ethereum registered almost half of those at $21 million. Out of the altcoins, Solana (SOL) observed the highest liquidations.

SOL has seen a bit of an explosion recently, so it’s not unexpected that it has attracted a large amount of speculators towards it. As a natural consequence of this higher interest in the cryptocurrency, its liquidations have been more than the other altcoins.

Mass liquidation events like today’s aren’t exactly a rare occurrence in the cryptocurrency sector, due to extreme amounts of leverage being easily accessible and the volatility that most of the coins witness on the regular.

It would appear that today’s liquidation squeeze has been unable to put off speculators, as the Bitcoin open interest (a measure of the total amount of contracts open on the futures market) is still at high values.

Bitcoin Open Interest

As such, it’s possible that Bitcoin will see more volatility in the near future and with it, another liquidation squeeze.

Bitcoin Price

Following its drop of more than 3%, Bitcoin is now trading around the $34,200 level.

Bitcoin Price Chart

This Bullish Divergence Is Once Again Forming For Bitcoin, Rally Soon?

Data shows a divergence is forming between Bitcoin and Ethereum’s open interest, something that has been bullish for BTC in the past.

Bitcoin Open Interest Has Declined, While Ethereum Has Seen Rise

According to data from the on-chain analytics firm Santiment, the BTC open interest has been going down since Monday. The “open interest” here refers to the total amount of Bitcoin contracts (in USD) that are currently open on the futures and options market.

When the value of this metric increases, it means that there are more positions being opened up on derivative exchanges right now. Such a trend can lead to increased volatility for the asset, as more positions generally come with higher overall leverage for the sector.

On the other hand, decreasing values suggest the traders are either closing off their positions or are getting liquidated. The cryptocurrency may become calmer following this kind of trend.

Now, here is a chart that shows the trend in the open interest for Bitcoin and Ethereum over the past month:

Bitcoin Open Interest

As displayed in the above graph, The Bitcoin open interest has observed a downtrend in the last few days. This decline in the indicator had first started when the fake iShares ETF announcement led to more than $100 million shorts being flushed in a flash.

The metric saw a bit of a rebound not too long after this sudden sharp liquidation squeeze took place, but it was quick to return back toward a downward trajectory.

At the same time that this latest decline in the Bitcoin open interest has occurred, the Ethereum open interest has registered a rise instead. This suggests that while contracts are closing up on BTC futures and options, the ETH side of the market is seeing renewed interest.

Interestingly, as Santiment has highlighted in the chart, the last time this trend occurred, the Bitcoin price benefited from an uplift. This previous occurrence of the pattern was between September 28 and 30, and shortly after this, the BTC price saw an increase of about 4.5%.

The divergence between the metrics of the two assets was much more pronounced back then as compared to now; however, the scales of both the decline in the BTC open interest and the rise in the ETH open interest were far greater.

Nonetheless, the same general pattern has still repeated this time, so it now remains to be seen whether Bitcoin would see a bullish effect this time as well, and if so, to what degree, given the lesser scale of the divergence.

BTC Price

Bitcoin has gone stale during the last few days as its price is still trading around the $28,400 mark right now.

Bitcoin Price Chart

Crypto Shorts See Carnage As Bitcoin Surges Towards $28,000

Data shows the crypto futures market has observed large liquidations in the past day as Bitcoin has recorded a sharp surge towards $28,000.

Crypto Futures Observed $78 Million In Liquidations In Last 24 Hours

A crypto futures contract is said to be “liquidated” when the derivative exchange with which said contract is open forcefully closes it up. This happens when the contract has accumulated losses of a certain percentage, the exact value of which may differ between platforms.

In this sector, it’s not too rare to see a flood of such liquidations occurring within a short span of time. The reason behind that is the high volatility that most of the assets display on average.

A lot of investors also like to play with extreme amounts of leverage, due to it being readily accessible in many platforms. Leverage alone can raise the risk of liquidation manyfold, so it combined with the high volatility can make it easy for contracts to be flushed down.

During the past day, the crypto market has once again seen some notable volatility, which has led to another mass liquidation event on the futures side, as the data below from CoinGlass shows.

Crypto & Bitcoin Liquidations

As is visible from the table, the crypto market as a whole has seen liquidations of more than $78 million in the last 24 hours. Out of these, $61.88 million involved the short contracts, equivalent to almost 80% of the total.

This naturally makes sense, as this latest liquidation squeeze has been led by a rally in Bitcoin’s price.

Bitcoin Crypto Price Chart

As displayed above, Bitcoin has enjoyed a sharp surge in the past day. At the peak of this rally, the coin had retested the $28,000 level but has since seen a bit of pullback.

The rest of the sector also followed the original crypto in this rally (as is usually the case), which is why shorts around the sector have taken a beating today. The below table shows what the individual contribution towards this liquidation squeeze has looked like for the different symbols in the sector.Bitcoin, Crypto Shorts

As expected, Bitcoin occupies the largest share of liquidations with $31.5 million, while Ethereum is second at $13.06 million. Interestingly, Loom Network (LOOM) is third in this list, despite the asset being just the 71st largest in the sector by market cap.

The altcoin has enjoyed a sharp rally of more than 113% in the past week, which is perhaps why the crypto has had such strong interest behind it on the futures market.

Bitcoin Open Interest Has Rebounded Since The Squeeze

As CryptoQuant analyst Maartunn has pointed out, the Bitcoin open interest, a measure of the total amount of contracts associated with the asset currently open on the futures market, has jumped back since the liquidation flush occurred.

Bitcoin Open Interest

It would appear that more speculators have jumped on the market even after seeing a large amount of traders getting liquidated. Generally, the open interest being high can lead to volatility, so the indicator retracing back to its levels from before the plunge could mean BTC would soon see more sharp price action in the near future.