The Bitcoin futures market sees a $5.2 billion decline as leveraged positions are unwound
Bitcoin's recent decline to $61,000 wiped out leveraged positions in the market, resulting in a significant decline in the total value of futures contracts traded on major exchanges. According to Coinglass, the value of futures contracts has fallen from $35.17 billion at the start of last week to just $28.7 billion as of April 18.
Analysts attribute this downturn to deleveraging caused by several factors, including escalating geopolitical tensions in the Middle East and stronger-than-expected economic data in the United States. The Bitcoin futures market had reached extreme levels last week, with funding rates, the cost of holding leveraged positions, for long positions rising to 25% on an annual basis. However, due to market turmoil, financing rates have fallen to 8%.
This period also saw significant Bitcoin liquidations, with nearly $1.8 billion in leveraged positions liquidated on April 12 and 13. Almost $219 million in liquidations took place on April 17 alone. The majority of these liquidations took place on OKX, amounting to $31 million, followed by Binance with $27 million.
With the Bitcoin halving approaching, recent market volatility may have already reduced some of the market's high leverage, which could have made the halving a volatile event. Despite Bitcoin's strong fundamentals, the lack of marginal buyers and strong long leverage positioning bias can exacerbate market downturns, especially when triggered by a macroeconomic event.
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