Bitcoin (BTC) has started a risk-off year as seen in the Futures Open Interest (OI) Crypto Margin indicator displayed below.
The decline in the OI percentage of BTC futures 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 the 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.
![Bitcoin: Futures Open INterest Crypto Margin [BTC] - Source: Glassnode.com](https://cryptoslate.com/wp-content/uploads/2023/01/crypto-margin.png)
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.
![Bitcoin: Futures Open Interest Cash Margin [BTC] - Source: Grassnode](https://cryptoslate.com/wp-content/uploads/2023/01/glassnode-studio_bitcoin-futures-open-interest-cash-margined-btc-all-exchanges.png)
Disclaimer: The levels shown represent only exchanges covered by Glassnode data.
