Bitcoin prices have seen a robust rebound, surging past $68,000 and triggering a notable increase in perpetual futures activity. This price recovery has brought significant relief to the Short-Term Holder (STH) cohort, with 75% of their coins now held in profit, according to Glassnode Insights.

Perpetual Futures Market Dynamics

The perpetual futures markets, which are the most liquid trading venues for digital assets, have seen substantial activity. Binance, Bybit, and OKX dominate this space, accounting for approximately 84% of the total open interest. A new model introduced by Glassnode tracks the sensitivity of leverage and open interest in these markets relative to changes in the spot Bitcoin price.

Open interest in perpetual futures has fluctuated between 220,000 and 240,000 BTC throughout 2024. However, since early June, this range has increased to between 260,000 and 280,000 BTC, indicating a higher appetite for speculation. Notably, the top three exchanges have seen significant changes in open interest, often due to margin call liquidations of traders holding highly leveraged positions.

Market Pivot Points

Glassnode’s analysis identifies pivot points in the perpetual market, marked by substantial reductions in open interest due to liquidations. Over the past year, there have been ten such deleveraging events, each resulting in a notable decrease in open interest.

The recent sell-off to $55,000 highlighted a significant long liquidation event, leading to a sharp decline in open interest across major exchanges. The perpetual funding rate, a metric indicating the directional bias of positions, showed that demand for long positions has waned since the market’s peak at $73,000 in March 2024.

Short-Term Holder Profitability

The recent price surge has positively impacted Short-Term Holders, who serve as a proxy for new demand and recent buyers. This group saw over 90% of their supply fall into a loss in late July, but the rally has returned 75% of their held supply to an unrealized profit. The Short-Term Holder MVRV metric, which measures profitability, has now recovered above the break-even level of 1.0.

Further analysis of the Short-Term Holder MVRV metric by age breakdowns shows that all sub-groups of recent buyers have returned to positive profitability. This trend is likely to bolster overall investor sentiment.

Net Realized Profit/Loss

Examining the net realized profit/loss for each sub-cohort reveals constructive improvements, with most age groups experiencing positive capital flows. The exception is the 1-month to 3-month cohort, which has borne the brunt of recent range-bound and downward price actions.

Summary and Conclusions

Perpetual futures markets remain the most liquid instruments within digital asset markets. The recent BTC price drop to $53,000 led to a significant deleveraging event, with many long-biased traders being liquidated. However, the subsequent price recovery has returned a majority of Short-Term Holders to an unrealized profit, supported by net positive capital inflows in recent weeks.

Disclaimer: This report does not provide investment advice. All data is for informational and educational purposes only. Users are solely responsible for their own investment decisions.

Exchange balances are derived from Glassnode’s database of address labels, using both published exchange information and proprietary algorithms. Accuracy is strived for, but figures may not always reflect an exchange’s reserves. Users should exercise caution and discretion.

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