Coinglass data reveals that open interest for bitcoin futures on centralized exchanges has hit an all-time high, surpassing levels seen during the November 2021 peak when bitcoin reached over $68,000. This surge in open interest reflects increased trading activity and heightened market sentiment around the largest cryptocurrency.
According to CoinGlass, aggregated open interest for bitcoin futures surpassed $26 billion on Friday, marking a significant increase from the final quarter of 2021 when open interest peaked at $24 billion. This uptrend in open interest aligns with the recent price rally of bitcoin, which reached a high of over $64,000 earlier this week.
Open interest functions as a vital gauge of market dynamics and trader outlook, encapsulating the aggregate worth of all active bitcoin futures contracts across various exchanges. The spike in open interest is prominently displayed on The Block’s Data Dashboard, indicating that open interest in bitcoin futures across platforms like Binance, OKX, Deribit, among others, has soared to exceed $21 billion.
Friday’s QCP Capital market update highlighted that retail-focused exchanges like Binance led the price action with bitcoin perpetual futures trading at premiums of $70 to $80 above the spot price. The report noted that bitcoin’s recent rally to over $64,000 was fueled by speculative retail buying.
Coinbase’s Weekly Market Report provided additional insights, noting that the open-interest weighted average funding rate reached 109% annualized on February 28, a level not seen since April 2021. The report highlighted that nearly $750 million of shorts were liquidated between February 25 to 28, leading to successive year-to-date highs in liquidated shorts. However, Coinbase analysts expressed cautious optimism, stating that while there may be an end to short covering based on futures’ long-to-short ratio, it is not entirely done yet.
Despite potential consequences from unwinding positions triggering long liquidations, Coinbase analysts remained constructive in their outlook over the next several months. They emphasized that as spot ETFs continue to be onboarded to wealth management firms and net inflows absorb liquid circulating supply faster than bitcoin miners produce, the overall outlook remains positive.