Bitcoin price below $10,000 caused open interest to fall $653 million, the largest since March


The open interest of Bitcoin futures (BTC) has just had its most extensive daily reduction in the last five months. Yesterday’s 11% drop caused more settlements than on May 9th, when BTC plunged 12.5% to USD 8,600.

Skew’s data shows us that total open interest decreased by $653 million, reaching $4 billion on September 3. That figure includes perpetuals (reverse swaps) and futures with established maturity in OKEx, CME, Binance and the remaining derivative exchanges.

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Yesterday’s move was the largest daily drop since the resounding $1 billion cascade settlement seen on March 13th that caused the price of Bitcoin to fall by 50%. That same day marked the largest massive sale of the Dow Jones Industrial Average since 1987, a drop of 10%.

This dramatic correction might not have been a negative record for the stock markets, but the Nasdaq Composite fell 5%, led by Apple (AAPL -8%), Salesforce (CRM -7.8%) and Microsoft (MSF -6.2%).

Apple shares (AAPL) fell 8% on September 3, causing a drop in its market capitalization of USD 180 billion. This was the largest daily loss for a single company. By comparison, Bitcoin Billionaire market capitalization is currently $194 billion.

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The manufacturer of iPhones is currently valued at just over $2 billion. Such an impressive figure could buy the entire altcoin market, paying a 1,300% premium to the current altcoin market capitalization of USD 140 billion.

The futures premium temporarily disappeared

Futures markets tend to trade at a small premium to regular spot exchanges. This is not unique to the crypto-currency markets, but rather an effect of the derivative instruments. To postpone the financial settlement of a trade, sellers often demand more money.

This indicator of the premium for futures contracts is known as the basis and usually ranges from 5% to 15% annualized. When the premium is positive, the market is characterized by the existence of contango. On the other hand, a zero to negative premium on futures contracts is unusual and indicates bearish sentiment.

The chart above shows how significant yesterday’s short fall below USD 10,000 was in the futures markets. Such a negative premium situation is known as „backwardation“, and was last seen four months ago, on May 10th to be exact. At that time, Bitcoin (BTC) recovered quickly over the next three days, bringing the base indicator back into positive territory.

The current annualized base of 4% cannot be considered bearish, although it is certainly not as bullish as the 10% level of just three days ago.