Only 150K Bitcoin remain in Future OI as switch to risk-off fast approaches

Bitcoin (BTC) has started a risk-off year as seen in the Futures Open Interest (OI) Crypto Margin indicator displayed below.

The decline in BTC futures OI percentage seen from July 2021 to 2022 indicates a return to the risk-on narrative throughout 2022. However, we are starting at about the lowest point in two years, and the risks are quickly removed as 2023 begins.

Through 2021, over 60% of futures contracts used BTC as an underlying asset. This helps with the risk-on narrative as BTC is more volatile compared to stablecoins.

Meanwhile, in 2022, crypto-backed margins remained relatively flat in the 35% to 40% range. However, the downward adjustment of 15% heading into 2023 indicates a rapid de-risking heading into the first quarter.

Crypto-backed margins have similarly declined in the previous four cases.

• May 2021, following China’s ban on cryptocurrencies
• Between November and December 2021, just after the all-time high (ATH)
• April 2022 Before and after the collapse of Luna
• October 2022 has a lead to FTX collapse, entering a rocky fourth quarter from a macro perspective.

About 150,000 BTC remain in futures OI, the lowest level since April 2022, and the risk-off trend continues to decline.

To further reveal the clear switch from BTC to risk-off and cash, the ‘Cash-Margined’ indicator shows a steady rise since April 2021 to the current level of 327,000 BTC. This is backed by cash as the underlying asset.

Disclaimer: The levels shown represent only exchanges covered by Glassnode data.