Data shows traders have opened new Bitcoin positions in the perpetual futures market over the past day, and the Funding Rate indicates these are long bets.
Bitcoin Open Interest Has Risen
According to on-chain analytics firm Glassnode, Bitcoin’s surge at the start of Monday coincided with a spike in Bitcoin perpetual futures Open Interest.
“Open Interest” tracks the total amount of open Bitcoin perpetual futures positions across all derivatives exchanges. An increase in this metric means investors are opening new positions. Since this often involves more leverage, it can lead to greater price volatility. Conversely, a decline suggests investors are reducing risk or facing liquidations, which can result in more stable price behavior.
The chart below shows the trend in Bitcoin Open Interest over the past two weeks:
As shown, Bitcoin Open Interest rose from 304,000 BTC to 310,000 BTC as the price recovered to $90,000 over the past day. This 2% increase, though modest, indicates the rally encouraged traders to open new positions in the perpetual futures market.
Open Interest includes both long and short positions, so it doesn’t reveal market bias. For that, the Funding Rate can be used instead. This metric measures the periodic fee exchanged between perpetual futures traders. A positive value means long investors are paying a premium to shorts, while a negative value indicates bearish bets are dominant.
As the chart below illustrates, the Bitcoin Funding Rate has been mostly positive over the last two weeks, reflecting a bullish sentiment among most perpetual futures traders. The rate also increased alongside the rise in Open Interest, moving from 0.04% to 0.09%.
“This combination signals a renewed buildup in leveraged long positioning, as perpetual traders position for a potential year-end move,” noted Glassnode.
BTC Price
Bitcoin has pulled back slightly after surging above $90,000 and is now trading around $89,500.
Frequently Asked Questions
FAQs Bitcoin Perpetual Futures Renewed Leveraged Long Activity
BeginnerLevel Questions
1 What are Bitcoin perpetual futures
They are a type of derivative contract that lets you speculate on Bitcoins future price without an expiry date You can hold the position as long as you want provided you have enough collateral
2 What does leveraged long positions mean
Long means betting the price will go up Leverage allows you to control a much larger position than your initial capital For example with 10x leverage a 1000 investment controls a 10000 position amplifying both gains and losses
3 Why is there renewed activity in this market
It typically means a surge in trading volume and open interest often driven by traders using high leverage to bet on a rising Bitcoin price usually due to positive market sentiment news or technical price breakouts
4 Whats the main benefit of trading perpetual futures
The primary benefit is the ability to use leverage to potentially magnify profits from small price movements You can also profit if you believe the price will fall
5 Whats the biggest risk
Leverage is a doubleedged sword A small move against your position can lead to significant losses potentially resulting in a liquidation where your position is automatically closed and you lose your collateral
Advanced Practical Questions
6 How does the funding rate work in perpetual futures
Its a periodic fee paid between traders to keep the futures price anchored to the spot price If the rate is positive longs pay shorts If negative shorts pay longs This is a key costincome factor for holding positions
7 What does an increase in leveraged longs tell us about market sentiment
It generally indicates that traders are becoming aggressively bullish However extremely high leverage in the market can also be a contrarian overheated signal increasing the risk of a sharp selloff if the price dips and triggers mass liquidations
8 What is a long squeeze or cascade liquidation
This is a common problem when many are overleveraged If the price falls suddenly it can trigger liquidations for those who bought with leverage These forced