web3: Foreign Media: High Bitcoin Futures Positions May Amplify Volatility

CoinWorld reports:

According to foreign media, the current position size in the Bitcoin futures market has clearly outpaced trading activity. According to Coinglass data, the open interest (OI) for BTC futures is approximately $48 billion, while the 24-hour trading volume during the same period is around $25 billion. This indicates that there are many positions accumulated in the market, but the liquidity to actually close these positions is insufficient.

Positions Exceed Trading Volume

Open interest reflects the total amount of long and short positions in the market that have not yet been settled, while trading volume represents the actual turnover of contracts over a certain period. The article points out that between 2019 and 2020, trading volume was typically 2 to 3 times that of open interest, but now the direction of the gap has reversed, indicating a significant increase in position density in the futures market.

If old positions exit while new positions take over, open interest may not necessarily decrease. Therefore, a higher OI often means that market bets are more concentrated. In contrast, trading volume better reflects the market's ability to absorb buy and sell orders in a short period.

Liquidation May Amplify Declines

The article argues that the real risk lies in mechanical squeezes. Once unexpected catalytic factors arise, especially passive liquidations triggered by insufficient margin, a large number of contracts may close in a short time. If daily trading is insufficient to absorb this selling pressure, price fluctuations may be rapidly amplified.

On-chain analysis firm Glassnode stated in a report that when open interest is significantly higher than daily trading volume, liquidation is less likely to be naturally absorbed by the market, and adverse price fluctuations are more likely to extend. The firm also noted that among the current new risk exposures, long positions are relatively high, but there has not been a corresponding demand in the spot market.

Spot Buying Support Weakens

Glassnode also mentioned that the low buy orders supporting the summer range have significantly thinned since peaking in early July, decreasing by about one-third compared to before. This means that if BTC tests the June low of around $58,000 again, the low-level support funds may be less than before.

In addition to the internal structure of futures, the gap between spot and futures trading is also widening. The data in the article shows that the 24-hour trading volume for BTC in the spot market is approximately $12.55 billion, significantly lower than the $25 billion in the futures market. Insufficient spot support often leads to more severe volatility dominated by derivatives.

As of the time of publication, BTC is priced around $63,500, up about 1% for the day. The article believes that the market still appears relatively calm on the surface, but if concentrated liquidations occur subsequently, the current position and liquidity structure may further amplify price fluctuations.

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