Bitcoin Price Prediction: Stablecoins Now Back Most Futures Positions

Bitcoin prediction traders on futures have largely moved away from using Bitcoin as collateral as the price rises. The share of Bitcoin open interest that is margin positions backed by Bitcoin rather than a stablecoin now stands at about 12% across exchanges.

The shift in collateral structure is separate from the market’s recent liquidation activity. Bitcoin rebounded from around $57,000 to above $80,000 after months of low-volatility trading between $60,000 and $68,000. Over the past 24 hours, $570.08 million in leveraged positions have also been liquidated in a short squeeze.

The Shift Away From Crypto Margin

For much of the past decade, opening a BTC futures position generally meant posting BTC as margin. Glassnode’s crypto-margin open interest metric places the current crypto-collateralized share at roughly 12%, compared with near-total dominance in 2019 and 2020.

A crypto-margined position uses the traded asset as collateral. When Bitcoin’s price falls, the value of the BTC supporting the position also declines while the trade moves against the holder. That feedback loop can bring a margin call at a moment of fast market movement.

… Continue reading the full article at the original source below.