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Crypto traders are still hesitant to rebuild speculative leverage. A month after the October 11 crash, open interest remains near the recent lows, with limited recovery.
The crypto market operates with lower leverage after the October 11 liquidation event. Since then, crypto markets have rebuilt only a small part of open interest, even for BTC.
BTC open interest did not have a lasting recovery since October 11. Briefly, open interest moved to $37B, but fell again to $32B as liquidations continued. | Source: CryptoquantA month after the price slide, BTC traded at $104,369, losing the $105K range with a rapid crash. ETH traded at $3,560.49, boosted by whale demand and more active derivative trading.
The market recovered in the past month as most assets bounced from their local lows, driven by a return to spot trading. Leveraged trading returned, but at a smaller scale and in a tighter price range.
At the same time, options open interest is growing, as traders are attempting more hands-on hedging strategies. After the peak options expiry event at the end of October, open interest on options is rebuilding fast.
BTC open interest remains below $33B
BTC open interest on all crypto exchanges, excluding the CME, took a downturn to $32B, with a downward trend in the past month. Open interest on Binance was again the leader, hovering around $11B for the past month.
Historically, leverage has recovered over periods of at least three months. This time, leverage remained constantly lower by 30%. One of the major factors behind the ongoing contraction was the constantly fearful trading sentiment. For most of the past month, traders made their decisions under conditions of fear or extreme fear.
Traders are also hesitating to place a bet on a clear direction and risk another liquidation. BTC now builds thinner liquidity for both short and long positions, as the price moves sideways, with the occasional sweep of its current range.
The recent price moves also show that short liquidity is the main driver for BTC rallies. The low leverage reveals the crypto market moves mostly to liquidate accumulated positions. The market also shows external inflows have slowed down, while internal shifts in liquidity are the main driver of activity.
Crypto traders still aware of liquidations
Liquidations are still happening often, as BTC volatility remains relatively high. In the past 24 hours, BTC long liquidations expanded to over $98M.
Total crypto liquidations reached $391M, with a predominance of long positions cleared. As the prices of most assets remain erratic, building up liquidity is impossible. The market continues to regularly de-leverage, trading in a tight range.
BTC remained above its 50-day moving average, showing resilience despite the worsening conditions. The market shows some signs of resilience, though not yet taking a clear bullish direction. ETH accumulation by whales continues, while the occasional coin and token are still capable of performing significant short-term rallies.
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