The derivatives market is on fire – Is the money fleeing or resetting positions?
Today's derivatives data reflects a state I have encountered quite often: not exactly panic, but clearly the market is undergoing a large-scale "deleveraging." Prices are declining broadly, OI is significantly negative, and volume is dropping – all three factors at once have never been a pleasant sign for altcoin holders.
ETH, SOL, SUI, DOGE are all deep in the red:
ETH: -3.93%
SOL: -5.34%
DOGE: -7.57%
SUI: -5.94%
I noticed not only the price drop but also the extremely high volume decrease. ETH volume -32.85%, SUI -27.33%, DOGE -24.52%. This indicates that new orders are not coming in, and old orders are fleeing.
OI is decreasing across most major coins:
DOGE: -7.63%
SOL: -6.98%
LINK: -9.16%
HYPE: -8.95%
Only ADA managed to maintain a slight increase in OI (+1.42%), but the price is still in the red. This is the picture of a market undergoing "deleveraging" – long positions are leaving, and there aren't many new shorts to replace them.
Funding fee remains positive:
This means that the long side still holds a high proportion, but the market does not support them. The short side has not really taken over, and there is no need to push hard because longs are withdrawing on their own.
Personal perspective:
I do not see this as a signal of a crash but rather as a margin reset process. Drops accompanied by declining OI usually create short-term technical bottoms. But to enter a trade again, I need two factors:
1. Funding decreases to near 0 or negative
2. OI shows signs of a slight turnaround, along with volume increasing again
Before those two things happen, I will mainly observe. No bottom fishing. No FOMO. As long as I survive, there is opportunity.
