Earlier on Tuesday, the U.S. Consumer Price Index (CPI) came in hotter than anticipated, reading the year-over-year rate of inflation at 3.8 percent. Following the news, the Bitcoin futures market saw major upheaval, as more than $1.25B worth of open interest got wiped out.
Bitcoin futures traders cut short-term risk
Tuesday’s U.S. inflation statistics confirmed a 0.6 percent rise in the CPI reading on a monthly basis. The reading is at its highest point since May 2023 and led to a sharp decline in Bitcoin’s open interest across 4 major derivatives platforms.
The sudden pullback following the inflation data meant that BTC futures traders closed their positions, reduced leverage, and tried to avoid getting any fresh exposure to the top cryptocurrency by market cap.
Across 4 major cryptocurrency exchanges, including Binance, Gate.io, Bybit, and OKX, BTC open interest fell by roughly $1.25B. Gate.io actually saw the largest pullback, where open interest tumbled by about $578M.
Binance came in at second place, seeing a fall in open interest to the tune of $473M. Meanwhile, Bybit and OKX saw their open interest readings crater by $123M and $73M, respectively.
The fact that BTC open interest declined on all 4 exchanges instead of it being an isolated incident on just one platform is worth highlighting. It shows that there was a broader short-term de-risking event in the BTC futures market.
According to data from crypto liquidation data platform Coinglass, over the past 24 hours, more than $275M worth of positions have been liquidated. Of the $275M, $229.12M were long positions, while the remaining $46.04M were short positions.
Is BTC waiting for a strong correction?
While BTC open interest declining on major crypto exchanges in itself is not necessarily a bearish sign, several other technical indicators point toward a looming price pullback for the digital asset.
For example, BTC flashed a rare bearish signal on Monday, which suggests that it may be on the path to a severe price correction.
Earlier on Tuesday, crypto wallet firm Exodus also significantly reduced its exposure to BTC, raising speculations that it is still far from cementing its place as a reliable institutional asset.