Research Summary
The report provides an in-depth analysis of the perpetual futures markets for digital assets, focusing on the role of Binance, Bybit, and OKX. It introduces a model to track the sensitivity of leverage and Open Interest in Futures markets relative to changes in the Bitcoin spot price. The report also examines the recent recovery of Bitcoin prices and its impact on short-term holders.
Key Takeaways
Perpetual Futures Market Analysis
- Market Dominance: Binance, Bybit, and OKX account for approximately 84% of the total open interest in the perpetual futures market, making them the industry leaders.
- Open Interest Sensitivity: The report introduces a novel model to track the sensitivity of leverage and Open Interest in Futures markets relative to changes in the Bitcoin spot price. This model helps identify points where over-leveraged speculators are liquidated during a bull market correction.
Bitcoin Price Recovery
- Short-Term Holder Relief: The recent surge in Bitcoin prices has provided relief for short-term holders, with over 75% of their supply moving back into profit. This is reflected in the Short-Term Holder MVRV metric, which has now recovered above the break-even level of 1.0.
- Profitability Across Age Bands: All constituents of the Short-Term Holder cohort have returned to positive profitability, indicating the strength of the prevailing uptrend. This is likely to positively impact overall investor sentiment.
Net Realized Profit/Loss Analysis
- Positive Capital Flows: Most age constituents of the Short-Term Holder cohort are experiencing a positive capital flow, with the exception of the 1m-3m cohort. This indicates constructive improvement in the market.
Actionable Insights
- Monitor Perpetual Futures Market: Given the dominance of Binance, Bybit, and OKX in the perpetual futures market, tracking their metrics could provide valuable insights into market trends and potential pivot points.
- Assess Short-Term Holder Metrics: The profitability of short-term holders and their net realized profit/loss can serve as indicators of market sentiment and potential price movements. Regular monitoring of these metrics could provide valuable insights.
- Track Open Interest Sensitivity: The introduced model for tracking the sensitivity of leverage and Open Interest in Futures markets relative to changes in the Bitcoin spot price could be a valuable tool for identifying market pivot points and assessing market risk.
