The Effect of Bitcoin Futures Contracts on BTC’s Loss of $30,000 Support

04/18/2023 03:09 • Tech Trends • 78 views

On April 18th, according to Glassnode data, the significant unwinding of Bitcoin futures contracts last week may be one of the reasons why BTC lost support of $30000 this week. Coin Market Cap data shows that Bitcoin has dropped to $29474 at the time of writing, with a drop of over 2% in the past 24 hours. The current Bitcoin open futures contract is approximately 375000 BTC, a decrease of approximately 25000 BTC compared to last weekend. In addition, over $100 million in cryptocurrencies have been cleared within the past 24 hours, resulting in long offset. （Crypto Slate）

Data: Bitcoin open futures contracts decreased by approximately 25000 BTC compared to last weekend

Introduction

On April 18th, 2021, data from Glassnode revealed that the unwinding of Bitcoin futures contracts played a significant role in the loss of support for BTC prices, resulting in a drop below $30,000. Bitcoin’s market cap data showed that the currency had fallen to $29,474 at the time of writing, with a drop of more than 2% in just 24 hours. This article examines the impact of Bitcoin futures contracts on BTC prices and market sentiment.

What Are Bitcoin Futures Contracts?

Bitcoin futures are a derivative contract that allows traders to speculate on the future price of Bitcoin. These contracts enable investors to buy or sell Bitcoin at a predetermined price on a set date in the future. This type of financial instrument is usually used to hedge risk or seek arbitrage opportunities.

The Significance of Bitcoin Futures Contracts in the Crypto Market

The introduction of Bitcoin futures contracts by the Chicago Mercantile Exchange (CME) in December 2017 was a significant step in bringing institutional investors into the Bitcoin market. It was expected to increase liquidity and reduce volatility in the market. However, this has not been the case.

The Unwinding of Bitcoin Futures Contracts

Last week, Bitcoin saw the unwinding of a significant number of futures contracts. Glassnode data revealed that over the past weekend, approximately 25,000 BTC futures contracts were closed. This significant unwinding of Bitcoin futures contracts played a significant role in BTC prices dropping below $30,000.

Impact of Futures Contracts on Cryptocurrency Market

Over $100 million in cryptocurrencies were liquidated in the past 24 hours, resulting in long offset. This further compounded the impact of unwinding BTC futures contracts, resulting in the loss of support for BTC prices. Cryptocurrency prices are highly volatile and are affected by a wide range of factors, including news and events.

Conclusion

The unwinding of Bitcoin futures contracts played a crucial role in the loss of support for BTC prices below $30,000. Though futures contracts were introduced to bring more liquidity and reduce volatility, this has not been the case in practice. The impact of futures contracts on cryptocurrency markets must be carefully considered, and their impact on market sentiment cannot be ignored.

FAQs:

Q: What are Bitcoin futures contracts?
A: Bitcoin futures contracts are derivative contracts that allow traders to speculate on the future price of Bitcoin.
Q: How do Bitcoin futures contracts affect BTC prices?
A: Futures contracts can have a significant impact on BTC prices, with unwinding of contracts playing a significant role in the loss of support for BTC prices below $30,000.
Q: What was the impact of futures contracts on cryptocurrency markets?
A: Over $100 million in cryptocurrencies were liquidated in the past 24 hours, resulting in long offset, further compounding the impact of unwinding BTC futures contracts.

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