CryptoQuant data has revealed new insights into the prevailing state of the Bitcoin market. The data points out that leverage in Bitcoin is easing, and the USDT balances held in exchanges are surging. The data gives a possible impression that cascade liquidation risk could be reduced as USDT collateral rises.
CryptoQuant founder and CEO Ki Young Ju shared valuable insights about the prevailing market conditions in the Bitcoin ecosystem. According to the executive, the Bitcoin market is showing signs of a declining cascade liquidation risk, with open interest on BTC-USDT futures now down 7% from its all-time high recorded on 21 November. The reduction in open interest on BTC-USDT futures suggests a potential decrease in leveraged positions, which could lead to a more stable market environment.
Exchanges held USDT balances rise, CryptoQuant data shows
Leverage in #Bitcoin market is easing.
BTC-USDT futures open interest is down 7% from its peak, while exchange-held USDT balances have surged 32% in a month.
If the deposited $USDT is for futures trading, more USDT collateral reduces cascade liquidation risk. pic.twitter.com/ASOUIH0x5U
— Ki Young Ju (@ki_young_ju) December 11, 2024
Ki Young Ju also noted that USDT balances held in exchanges have risen by 32% in the last month. The executive highlighted that the USDT could be used as collateral for futures trading positions on the exchanges, therefore reducing cascade liquidation risks. The broader crypto market views the rising exchange-held USDT balances as a potential buffer against selling pressure from market participants.
According to additional data from the blockchain analytics firm, the leverage ratio, which divides global futures open interest by the number of coins held on exchanges, has also been declining since November 25th.
The metric has been on a progressive surge since August 12th, peaking at $0.2459 before dipping to $0.2237 as of December 10th. The recent decline in the Bitcoin Estimated Leverage Ratio shows a prevailing trend developing among investors toward lower leverage in the futures market.
Bitcoin reserves in centralized exchanges decline to ATLs
Meanwhile, data from CryptoQuant also shows that Bitcoin reserves in all centralized exchanges have declined to an all-time low of 2.4 million BTC. The data also shows that the exchange reserves have been steadily declining since the beginning of the year.
Declining reserves indicate higher buying pressure, and investors are confident about the prevailing bullish market sentiment. The data also shows that investors prefer holding their assets in non-custodial wallets, showing more demand for Bitcoin.
Bitcoin demand is also evident on the U.S. spot Bitcoin exchange-traded funds, which currently hold $107.76 billion worth of Bitcoin, according to Sosovalue.
Bitcoin has risen 4.72% in the last 24 hours and 4.75% in the last seven days. According to CoinMarketCap, the crypto asset is currently retailing at $100,434 with a market cap of $1.988 trillion and a 24-hour trading volume of $95.6 billion.
TradingView also shows the asset trading between $104,082 and $90,589. However, the bulls appear to be in control of the market, and the asset is more likely to break the range and continue its upward trajectory that started in mid-September. The asset may find resistance at the top of the range, causing liquidations that may drive prices towards the bottom.
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