Bitcoin Open Interest Sinks to 12% as Traders Ditch Crypto Margin

The share of Bitcoin open interest that is crypto-margined has plummeted to around 12% across all exchanges, down from nearly 100% in 2019-2020. This shift away from crypto-backed positions suggests that traders have opted for the steadier float offered by stablecoin-margined contracts.

Bitcoin futures traders have largely abandoned using Bitcoin as collateral for their positions, with the majority now backed by stablecoins. This trend mirrors how the broader derivatives market has matured, with institutional flow settling in dollars rather than coins.

Despite this shift, liquidations continue to occur, with $570.08 million in positions wiped out in the past 24 hours. Shorts were hit harder than longs, with $329.60 million in shorts lost versus $240.48 million in longs. The losses snowballed as price climbed, with Bitcoin's $295.41 million slice being the largest loss.

The short squeeze may not be over yet, according to the data, even if it doesn't directly cause the trend of dollar collateral displacing crypto. A broader access to fiat markets has increased exposure for investors looking for ways to trade crypto, making the coin less susceptible to major price movements.