Bitcoin futures open interest (OI) — a measure of derivative market participation — has gained almost 13% from the start of the year, which analysts say could reflect more risk appetite for crypto.
Bitcoin futures OI has fallen 17.5% from 381,000 BTC to 314,000 BTC over the past three months, following a roughly 36% price correction from early October, “reflecting a phase of risk reduction and the unwinding of leveraged positions,” said CryptoQuant analyst “Darkfost” on Monday.
However, a recovery in Bitcoin futures OI could be in motion, said Darkfost. Data from Coinglass shows it gained from an eight-month low of $54 billion on Jan. 1 to more than $61 billion on Jan. 19.
It also hit an eight-week high of $66 billion on Jan. 15.
“At present, open interest is showing signs of a gradual recovery, suggesting a slow return of risk appetite,” said the analyst.
“If this trend continues and strengthens, it could increasingly support a continuation of the bullish momentum, although for now the rebound remains relatively modest.”
OI refers to the number or notional value of crypto derivatives contracts that remain open and have yet to be settled, or in other words, a measure of how many active bets exist in the market at any given time.
When it is rising, more traders enter leveraged positions, indicating growing confidence and risk-taking, but a falling OI indicates deleveraging as traders reduce exposure and risk.
Deleveraging is also good for markets
Zooming out shows that futures OI is still down 33% from its all-time high of $92 billion in early October.
This is also a “deleveraging signal” which often marks significant bottoms, “effectively resetting the market and creating a stronger base for a potential bullish recovery,” the analyst said last week.
Related: Bitcoin open interest falls 30%, setting up bullish recovery: Analyst
Bitcoin options open interest exceeds futures
Co-founder and CEO of Coin Bureau, Nic Puckrin, observed on Sunday that Bitcoin options OI flipped futures OI last week.
Futures are a direct leveraged bet on Bitcoin’s price direction. Traders are obligated to buy or sell at a set settlement price and date, and if the price moves against them, they get liquidated.
Options provide the right, not the obligation, to buy or sell at a strike price with no forced liquidations, which are better for dampening volatility and overall market stability.
According to Checkonchain data, aggregate Bitcoin options OI over all exchanges stands at $75 billion, while futures OI is at $61 billion in notional value.
“This means big money is building positions that shape price itself through hedging and expiry mechanics. It isn’t just betting up or down anymore,” Puckrin said.
“There’ll be fewer liquidation cascades, more sticky levels, and retail leverage getting trapped near key prices. BTC’s market is behaving less like a casino and more like a structured financial system.”
Options OI is currently highest at the $100,000 strike price with $2 billion on Deribit, one of the industry’s largest derivatives exchanges.
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