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Bitcoin (BTC) has started the year risk-off as seen in the crypto margin indicator for open interest futures (OI) 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. But 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 likewise fallen four times in the past.
- 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 and enters 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.
