BlockBeats News, December 2nd, Wintermute released a market report stating that the rate hike expectations from the Bank of Japan completely erased last week’s stable situation and triggered widespread deleveraging. The market structure has been cleanly reset: leverage has significantly decreased, funding has returned to neutral, and spot participation has markedly increased. Now everything is trading based on macro logic, but the major currency pairs no longer appear as fragile.
From a market structure perspective, the situation is actually improving: the basis has fallen to cyclical lows, with Bitcoin’s 90-day annualized basis close to 4% to 5%, and Ethereum close to 3% to 4%, reflecting continued accumulation of leveraged long positions. The total open interest of perpetual contracts has decreased from around $230 billion in early October to approximately $135 billion currently, clearing a significant amount of excess leverage and reducing the likelihood of further cascading liquidations. Spot trading volume share has increased, and considering the Thanksgiving holiday impact, the depth of spot supply has been better than expected. Lower leverage ratios, negative funding, and healthier spot participation are usually what is needed before the market reorganizes post a macroeconomic stability.
