In December, traders increased leverage by an additional 2.4 billion dollars despite a 40 per cent decline in trading. The futures in Bitcoin and Ethereum increased as bulls disregarded the market-fear indicators.
Futures markets swelled up throughout the downturn of December. The open interest increased by 7 percent in Bitcoin and Ethereum, marking leverage increases of $35 billion to $38 billion amid the general fear.
Source: CryptoQuant
Bitcoin gains rose by 1 billion dollars to 23 billion dollars. Ether futures surged by $1.4 billion, from 13 billion to 15 billion. The prices remained close to 88,000, and the Fear Index reached 27. This growth occurred when the bulk of traders anticipated a withdrawal.
Fresh Money Flows Into Derivative Markets
The CryptoQuant data shows that over the past week, new leverage to the tune of $450 million was added. Bitcoin positions increased 2 percent per week. Instead of quitting, traders took new positions and bet on recovery, and the action persisted as an unfriendly mood prevailed on social media.
Source: CryptoQuant
Binance, Bybit, and OKX showed a stable accumulation trend, and Gate.io was the first to take off the expansion wave. All the tracked exchanges retained or augmented their positions in the course of the fall in December. There was no significant platform that cleared the risk in the month.
Data on the rate of the funds indicated that traders were paying a steady premium. Long books occupied a leading position in the derivatives market, with short interest remaining low in all the major outlets. Bulls maintained conviction throughout the correction period.
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Warning Signs Flash As Bulls Hold Ground
This trend is against common capitulation indications. Market bottoms are only achieved when leverage is cleared. A Fear Index of 27 and an increasing open interest is an optimistic indications; it has been historically demonstrated that washouts need greater despair.
Markets have yet to hit the panic levels that are necessary for final bottoms. December was a demonstration of conviction in the absence of price-action confirmation. There was an increase in open interest with a significant fall in the spot volumes and this caused a concern among market observers.
Whales lost 20000 Bitcoin, and activity dropped 40 percent. Retail traders leveraged up; professional money fled. Institutional wallets recorded net outflows all of December, and smart money lessened exposure to retail increment of bets.
The mismatch between the increasing leverage and the decreasing activity depicts ambivalent signs. Bulls are not ready to give up even when the market conditions decline. The volume measures indicate that the level of participation had declined dramatically. The next few weeks will determine whether this belief was justified or not.
The rates of funding remain positive, which is an indication of a long bias. Traders are still paying to stay bullish with a small amount of short liquidations. The arrangement sets the stage for unstable direction in the future.
Source: https://www.livebitcoinnews.com/traders-added-2-4b-in-leverage-during-decembers-fear-the-stubborn-bulls/
