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Bitcoin derivatives markets experienced a significant contraction in open interest, marking the sharpest decline since the August 2024 yen-led global market crash.
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Despite Bitcoin’s price rebound above $105,000, traders remain cautious amid geopolitical tensions and upcoming futures expirations.
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According to K33 Research Head Vetle Lunde, the rapid unwind in BTC perpetual contracts signals a de-risking phase, with open interest falling below 260,000 BTC for the first time since May.
Bitcoin derivatives see sharp open interest drop amid geopolitical risks; BTC price rebounds above $105K while traders brace for futures expiry and market uncertainties.
Bitcoin Perpetual Contracts Open Interest Hits Lowest Since May Amid Geopolitical Uncertainty
The cryptocurrency market witnessed a notable contraction in Bitcoin perpetual contracts open interest, shrinking by 17,394 BTC within 24 hours. This decline represents the most significant drop since the yen-led global market crash in early August 2024. The reduction brought total notional open interest below 260,000 BTC, a level unseen since early May. This rapid deleveraging reflects traders’ cautious stance as geopolitical tensions, particularly surrounding the Iran-Israel ceasefire, continue to weigh on market sentiment.
Price Rebound and Market Sentiment: A Complex Landscape for Bitcoin Traders
Bitcoin’s price rallied to approximately $105,500, a 2.3% increase over 24 hours, buoyed by ceasefire news between Iran and Israel. However, despite this positive price action, derivatives traders remain wary. The Fear & Greed Index, while indicating moderate greed at 65, suggests that market participants are hesitant to increase risk exposure amid ongoing uncertainties. The juxtaposition of price gains with declining open interest highlights a market in flux, balancing optimism with caution.
Impact of Upcoming Bitcoin Futures Expiry on Market Dynamics
With the monthly Bitcoin futures expiry scheduled for Friday, June 27, market participants are closely monitoring derivatives positioning. Monthly expirations often catalyze volatility as traders adjust or close positions. However, current data from the Bitcoin Volatility Index, tracked by Deribit, shows a decline to 39.15—the lowest since October 2023—indicating subdued expected price swings. This low volatility environment suggests a temporary stabilization, though geopolitical headline risks remain a wildcard.
Options Market Insights: Neutral Flows and Bullish Sentiment for Later Expiries
Analysis from Wintermute’s OTC desk reveals that options flows are currently skewed neutral, with straddle and call selling clustered around the $105,000 strike and short puts positioned at $100,000 for the June 27 expiry. This positioning implies that traders anticipate Bitcoin to hover near the $105,000 level in the short term. Notably, while implied volatility on short-dated contracts remains elevated due to geopolitical tensions, longer-dated options expiring in July and September show emerging bullish sentiment, indicating expectations for reduced uncertainty in the medium term.
Broader Market Correlations and Future Outlook
The broader equity markets mirrored Bitcoin’s cautious optimism, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all posting gains exceeding 1% amid easing geopolitical concerns. However, K33’s Vetle Lunde cautions that attention will likely shift toward domestic U.S. fiscal policies, including President Trump’s budget and tariff announcements, which could introduce new headline risks. Traders are advised to remain vigilant as these macroeconomic factors may influence Bitcoin’s price trajectory and derivatives market behavior in the coming weeks.
Conclusion
Bitcoin’s derivatives market is currently navigating a phase of reduced leverage and cautious positioning, driven by geopolitical uncertainties and the impending futures expiry. While price action shows resilience with a rebound above $105,000, the sharp decline in open interest underscores a collective de-risking among traders. The evolving options market sentiment suggests that while short-term volatility remains subdued, medium-term optimism is building. Investors should monitor upcoming macroeconomic developments closely, as these will likely shape Bitcoin’s market dynamics beyond the immediate horizon.
