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Bitcoin: Futures market shows affinity for stablecoin collateral

Press Releases Crypto News AMB-Crypto Bitcoin: Futures market shows affinity for stablecoin collateral

There was a decisive shift in favor of stablecoin-margined BTC contracts.
Owing to BTC’s recent losses, short position traders swung into action.

Bitcoin’s [BTC] futures market has exhibited rapid growth over the years, making it one of the most preferred crypto derivatives instruments among institutional investors. Futures data is frequently used to forecast future BTC price movements and gain a better understanding of market sentiment.

Read Bitcoin’s [BTC] Price Prediction 2023-24

Prominent on-chain analyst Will Clemente took to social platform Twitter to highlight a rather fascinating trend emerging in the BTC futures landscape. Using Glassnode’s data, the researcher drew attention to the steady decline in the number of crypto-collateralized open BTC futures contracts over the last two years.

Source: Glassnode

As evident in the graph, the percentage of crypto-margined contracts fell from 70% during the peak of the historic 2021 bull market, to just 23% as of 10 August. The major takeaway from these findings was a decisive shift in favor of stablecoin-margined contracts.

How does it matter?

It’s basic knowledge that futures contracts allow traders to speculate on Bitcoin price movements without holding the asset. Traders in the futures market generally have two types of crypto derivatives at their disposal – crypto-collateralized and stablecoin-collateralized contracts.

Crypto-collateralized or coin-margined contracts are advantageous for long-term investors since they are settled in the underlying cryptocurrency, in this case Bitcoin. This means that they can continue to HODL without having to convert their assets into stablecoins.

On the other hand, stablecoin-margined contracts are sett

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Author: Aniket Verma

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