Analyst warns of Bitcoin volatility

Bitcoin appears to be on the verge of increased volatility due to a combination of leverage, retail speculation, and aggressive spot selling.

Popular crypto analyst Ted recently highlighted some pretty alarming derivatives market indicators.

Bitcoin has recorded a series of highs and lows on the hourly chart. Recently, the cryptocurrency fell below the $75,000 level.

Total open interest rebounded sharply towards 268,600 coins. There is a large influx of new futures positions.

The 8-hour weighted average funding rate rose to a very positive 0.0085%. This proves that the overwhelming majority of these new leverage positions are long bets.

Meanwhile, the Coinbase Premium Index fell deep into negative territory (-0.189).

Coinbase’s US retail and institutional spot traders are selling or shorting. As a result, spot prices continue to fall, while offshore derivatives exchanges continue to accumulate long leveraged positions.

As Coinbase’s premium becomes significantly negative, open interest and funding rates will skyrocket, potentially leading to a “long squeeze” setup.

Longs have to pay a large premium to maintain their position during falling prices. This could result in cascading liquidation flushes.

mysterious bid

Meanwhile, there has been a wave of massive capital flight from US spot Bitcoin ETFs. Institutional outflows from spot ETFs are currently reaching a staggering $700 million per day.

That said, the market seems eerily resilient.

Despite $700 million in daily outflows from Wall Street products, the price of Bitcoin remains firmly above $75,000.

“Prices are holding this time,” the Bitfinex exchange noted. “Absorbed by unidentified bidders.”

In the past 24 hours, a staggering total of $295 million has been liquidated in the crypto market. Long positions accounted for a whopping $248 million of the total, and perfectly illustrate the current predicament of bullish traders.