The bitcoin (btc) and ethereum (eth) derivatives market experienced significant fluctuations following the incident on January 9, where the US Securities and Exchange Commission (SEC) Twitter account was compromised. This false announcement of the one-time approval of a bitcoin ETF sparked a series of market reactions that wiped out more than $50 billion in bitcoin's market capitalization.
The derivatives market experienced unprecedented volatility. CryptoSlate Analysis of CoinGlass data showed an increase in total trading volume of 8.52% to $79.02 billion. This increase in trading activity likely reflects the market's rapid response to fake news, as traders sought to capitalize on the volatility or mitigate their risks.
However, this was offset by a 2.78% decline in open interest, reducing it to $19.69 billion. The decline in open interest, which represents the total number of outstanding derivatives contracts, suggests that many traders were closing their positions amid uncertainty, preferring to reduce exposure rather than participate in a highly volatile market.
While bitcoin options volume saw a considerable drop of 39.73% to $625.97 million, options open interest increased slightly by 2.18% to $10.24 billion. This indicates that although there was a reduction in trading of options contracts, several traders maintained their positions. This could be due to a strategy of waiting out market fluctuations or a belief in long-term trends that are not affected by short-term volatility.
The market witnessed liquidations worth $95.41 million, of which long positions accounted for $59.39 million and short positions amounted to $36.02 million. The increased liquidation of long positions suggests a bearish market reaction, where traders who were betting on a price increase were caught off guard by the drop in prices after the clarification of the ETF news.
If we look at Binance and Bybit, the two largest exchanges by open interest, we see that both platforms are seeing an increase in trading volume, indicating increased activity. The decline in open interest on these platforms further corroborates the tendency of traders to choose to close positions in a volatile environment.
| Symbol | Price | Price (24h%) | Volume (24h) | Volume (24h%) | Market cover | Open interest | Open interest (24h%) | Settlement (24h) |
|---|---|---|---|---|---|---|---|---|
| btc | $44911.2 | -4.01% | 77.66 billion dollars | +5.23% | $884.97 billion | 19.66 billion dollars | -3.59% | 94.36 million dollars |
| eth | $2375.65 | +4.47% | $41.18 billion | +77.57% | $285.82 billion | $7.78 billion | +10.67% | $49.30 million |
As for the ethereum derivatives market, the situation presents a different picture. Total ethereum derivatives trading volume increased sharply by 79.85% to $41.3 billion. This substantial increase in volume could be attributed to traders pivoting towards ethereum amid the bitcoin turbulence or perceiving ethereum as a safer or more lucrative option during this period of heightened market sensitivity.
Interestingly, despite this increase in overall trading volume, options volume for ethereum derivatives decreased significantly by 51.55% to $320.63 million. This disparity suggests that while there was an overall increase in trading activity, the options market saw a pullback.
Traders might have been more inclined to participate in futures contracts, seeing them as more direct ways to capitalize on or hedge against market volatility rather than dealing with the complexities of options trading under such uncertain conditions.
Open interest in ethereum also increased by 11.52% to $7.81 billion, in contrast to the pattern seen in bitcoin. This indicates that new positions are being opened, which, combined with the increase in trading volume, suggests a more bullish sentiment in the ethereum market, or at least a perception of ethereum as a more stable asset in the face of crises. market.
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