Connect with us
  • tg

Cryptocurrency

Bitcoin futures open interest jumps by $1B: Manipulation or hedge?

letizo News

Published

on

Bitcoin’s (BTC) open interest on derivatives exchanges experienced a sudden surge of $1 billion on Sep. 18, prompting investors to question whether whales were accumulating in anticipation of the unsealing of Binance’s court filings.

However, a closer look at derivatives metrics suggests a more nuanced picture, as the funding rate did not exhibit clear signs of excessive buying demand.

The decision to unseal these documents was granted to the U.S. Securities and Exchange Commission (SEC), which had accused Binance of non-cooperation despite previously agreeing to a consent order related to unregistered securities operations and other allegations.

BTC futures aggregate open interest, USD (green, left). Source: CoinGlass

The open interest spiked to $12.1 billion while Bitcoin’s price concurrently increased by 3.4%, the highest point in over two weeks at $27,430.

However, investors soon realized that, aside from a comment by the Binance.US auditor regarding the challenges of ensuring full collateralization, there was little concrete information revealed in the unsealed documents.

Later in the day, Federal Judge Zia Faruqui rejected the SEC’s request to inspect Binance.US’s technical infrastructure and share additional information. Nevertheless, the judge stipulated that Binance.US must furnish more details about its custody solution, casting doubt on whether Binance International ultimately controls these assets.

By the end of Sep. 18, Bitcoin’s open interest had receded to $11.3 billion as its price dropped by 2.4% to $26,770. This decline indicated that the entities behind the open interest surge were no longer inclined to maintain their positions.

These whales were likely disappointed with the court’s outcomes, or the price action may not have unfolded as expected. In any case, 80% of the open interest increase disappeared in less than 24 hours.

Futures’ buyers and sellers are matched at all times

It can be assumed that most of the demand for leverage was driven by bullish sentiment, as Bitcoin’s price climbed alongside the increase in open interest and subsequently plummeted as 80% of the contracts were closed. However, attributing cause and effect solely to Binance’s court rulings seems unwarranted for several reasons.

Firstly, no one anticipated that the unsealed documents would favor Binance or its CEO, Changpeng “CZ” Zhao, given that it was the SEC that had originally requested their release. Additionally, the Bitcoin futures contract funding rate, which gauges imbalances between long and short positions, remained largely stable throughout this period.

BTC futures average 8-hour funding rate. Source: CoinGlass

If there had indeed been an unforeseen demand surge of $1 billion in open interest, primarily driven by desperate buyers, it’s reasonable to assume that the funding rate would have spiked above 0.01%. However, quite the opposite unfolded on Sept. 19, as Bitcoin’s open interest expanded to $11.7 billion while the funding rate plunged to zero.

With Bitcoin’s price rallying above $27,200 during this second phase of open interest growth, it becomes increasingly evident that, regardless of the underlying motives, the price pressure tends to be upward. While the exact rationale may remain elusive, certain trading patterns could shed light on this movement.

Market makers’ hedge could explain OI spike

One plausible explanation could be the involvement of market makers executing buy orders on behalf of substantial clients. This would account for the initial enthusiasm in both the spot market and BTC futures, propelling the price higher. After the initial surge, the market maker becomes fully hedged, eliminating the need for further buying and leading to a price correction.

During the second phase of the trade, there is no impact on Bitcoi price, as the market maker must offload the BTC futures contracts and purchase spot Bitcoin. This results in a reduction in open interest and may disappoint some participants who were anticipating additional buying fervor.

Rather than hastily labeling every “Bart” formation as manipulation, it is advisable to delve into the operations of arbitrage desks and carefully analyze the BTC futures funding rate before jumping to conclusions. Thus, when there is no excessive demand for leveraged long positions, an increase in open interest does not necessarily signify a buying spree, as was the case on Sep. 18.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Cryptocurrency

Forget 1%, 3%, or 5%: Financial Advisor Recommends Up to 40% Bitcoin Allocation

letizo News

Published

on

Bitcoin’s evolution has been quite spectacular, especially in terms of global adoption. Recall that the asset was mostly ignored by legacy investors for its initial years, then became the laughing stock of many, before it finally started to capture the attention of previous doubters.

As prominent names like Paul Tudor Jones III, Kevin O’Leary, or even former critic Ray Dalio started to enter the ecosystem, their general advice was that people should look to invest no more than 5% in the cryptocurrency. However, the adoption curve has completed a 180-degree turn, and some financial advisors are now recommending bigger percentages. A lot bigger.

40% in BTC?

As reported by CNBC, Ric Edelman, head of Digital Assets Council of Financial Advisors, noted that a lot has changed since his initial take on the matter, which was four years ago. At the time, he advised investors, especially the more conservative ones, to allocate around 1% of their portfolios to BTC.

“Today I am saying 40%, that’s astonishing. No one has ever said such a thing,” he said now.

The reason for this monumental increase in his recommendation is the global status of Bitcoin (and some other cryptocurrencies). Most were ridiculed several years ago when it was unknown whether countries, such as China, or even the US, might move to ban them in some form. Now, the situation is entirely different as the US and a few others have presented plans on how to accumulate BTC as a reserve asset.

Old-School 60/40 Doesn’t Work

One of the most popular theories for investing is allocating 60% of a portfolio into stocks and 40% into bonds. While this classic split may have worked in the past, the landscape is different now, and it requires more risk and a greater exposure to stocks, according to Edelman.

“If you’re a financial advisor and you had a 30-year-old client who was saving for their long-term future, you would tell them to put 100% of their money in stocks, because they have 50 years to go. Today’s 60-year-old is kind of like yesterday’s 30-year-old. You need to get better returns than you can get from bonds, and you need to hold equities longer than ever before.”

Instead of such solid exposure to stocks, though, he said people should diversify with crypto and BTC in particular, which is a “wonderful way to improve modern portfolio theory statistics.”

“The crypto asset class offers the opportunity for higher returns than you’re likely to get in virtually any other asset class,” Edelman concluded.

SPECIAL OFFER (Sponsored)
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).

LIMITED OFFER for CryptoPotato readers at Bybit: Use this link to register and open a $500 FREE position on any coin!

Continue Reading

Cryptocurrency

Israel Will Buy BTC and ETH and Give it to a Gambling Offender

letizo News

Published

on

Israel will buy 19.15 BTC and 83 ETH, collectively worth over $2.2 million. But if you think that this is a step toward adopting crypto or that the country is planning to establish an alternative currency reserve – well, think again.

Shai Siboni – a popular Israeli footballer, who’s also a known gambling offender – had his crypto wallet “lost” while he was detained in police custody over two years ago.

Speaking on the matter was a police official, who said:

This is a serious oversight and it is still unclear how the wallet disappeared.

So, to make up for the “oversight,” the state of Israel will purchase a brand new digital wallet, fund it with 19.15 BTC and 83 ETH, and, well, give it back to Siboni.

Siboni Turned into “an Extremely Wealthy Man”

Commenting on the matter was also a senior official, who said that “this wallet was worth about a million shekels about seven years ago. Since then, currency prices have risen dramatically, and the state will pay dearly for the negligence of an elite police unit.”

This is one of the most serious failures we’ve had, and the saddest thing – no one is taking responsibility.”

Siboni, who is a convicted gambling offender has been turned into an “extremely wealthy man,” concluded the official.

A Gambling Offender

To provide a bit of context on the profile of Siboni – he’s considered a major target when it comes to illegal gambling as part of the Lahav 433 Unit’s investiagtions.

During the two World Cups – the one in 2014 in Brazil and the one in 2018 in Russia – Siboni operated illegal betting lines for thousands of gamblers.

Suspicions place his profits to the tune of more than 100 million shekels. These were used to purchase luxury cars, apartments and other assets. The hard truth, however, is that the state had difficulty proving that the money came from criminal activity, so the majority of his property (including the crypto wallet) was returned to him.

SPECIAL OFFER (Sponsored)
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).

LIMITED OFFER for CryptoPotato readers at Bybit: Use this link to register and open a $500 FREE position on any coin!

Continue Reading

Cryptocurrency

Calm Before the Storm? Bitcoin Consolidates Around $107,000: Weekend Watch

letizo News

Published

on

The broader cryptocurrency market remains relatively calm and for the past 24 hours there haven’t been any major movements.

Bitcoin continues trading in a more or less narrow range between $106,000 and $108,000, begging the question if this is the calm before the storm and if a major move is just around the corner.

Bitcoin Price Consolidates at $107K

Bitcoin’s price didn’t go through any major moves during the past day and continues consolidating at around $107,000.

The absence of volatility is also seen in the level of liquidations, which has declined by 4% on the daily, currently standing at around $200 million, according to Coinglass. The majority of them are short positions, meaning that the bulls are defending this area successfully, at least so far.

As seen in the chart below, the price has managed to recover from the losses endured last weekend following the US strike of strategic Iranian nuclear bases.

That said, as CryptoPotato reported, the number of larger wallets, holding 10 BTC or more, hit 152,280, which is the highest since March. This signals that deep-pocketed investors show a lot of confidence and might be positioning themselves for an incoming rally.

BTCUSD_2025-06-28_12-12-29
Source: TradingView

Altcoins Trend Flat but Leaning Bullish

The majority of large-cap altcoins are trading in the green. They are not charting any significant gains, but the heatmap is obviously leaning bullish.

Notably, Ripple’s XRP is charting gains of more than 4% on the day, being the best-performing altcoin from the top 10 by means of total market capitalization.

Bitcoin’s market dominance is down by around 0.5% in the past 24 hours, which shows that the altcoins are attempting to capitalize on its flat trend. It’s interesting to see if this will continue.

The best performer today is Quant (QNT), which is up 6.5%, followed by SPX6900 and Jupiter (JUP), both of which are up by 5.3% and 4.8%, respectively.

On the other hand, Aptos, Pi Network, and SEI are today’s worst performers, down by 7.7%, 3.8%, and 3.6%.

Screenshot 2025-06-28 at 12.16.34
Source: Quantify Crypto
SPECIAL OFFER (Sponsored)
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).

LIMITED OFFER for CryptoPotato readers at Bybit: Use this link to register and open a $500 FREE position on any coin!

Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

Continue Reading

Trending

©2021-2024 Letizo All Rights Reserved