The Bitcoin market is dealing—here’s what’s happening

Bitcoin's fall to $61,000 last week took away its fair share of gains.

Look no further than the Bitcoin futures market, where the total value of futures contracts traded on major exchanges fell by $5.2 billion, according to Coinglass. As of this writing, open demand for Bitcoin futures contracts stood at $28.3 billion on Wednesday.

“This is an absolutely remarkable event,” said Greg Magadini, director of results at Amberdata. Decrypt In the interview, growing geopolitical tensions in the Middle East and stronger-than-expected economic data in the US recently threw crypto off kilter.

After setting a new all-time high of $73,000 last month, Bitcoin It fell 16 percent to its lowest level since February. Open demand for Bitcoin futures soared to $36 billion in March as traders bet the cryptocurrency's price would largely rise. “The fundamentals for Bitcoin have not been strong,” Magadini said.

Futures contracts – an agreement to buy or sell an asset at a specified price at a later date – allow traders to speculate on movements in the asset's price. And based on the difference between the futures contract market's payments and Bitcoin's spot price, Magadini said, “the armed long position was kind of extreme last week.”

As the cost of holding a long position used in the Bitcoin futures market ballooned, funding costs for Bitcoin futures rose 25% annually, Magadini said. After a tumultuous week in the markets, however, funding costs for Bitcoin futures fell to 8%.

Meanwhile, the last day Bitcoin worth 90 million dollars was liquidated CoinglassHolding the lion's share of liquidity on the exchange at OKX at $31 million and Binance at $27 million. However, last week's discharges on Friday and Thursday were very heavy. A combined $1.8 billion worth of positions were closed over the two days.

“Everyone was already leaning the same way, so it didn't matter if the base was big,” Magadini said. If the marginal buyer no longer exists and everyone is in the same position, the second any kind of selling occurs, we get a loss effect like this.

Magadhini Feared Bitcoin Halving Before The Liquidations Happened—Expected later this week– If traders choose to sell the news, it may cause backlash. But this weekend's upheaval may have negated any potentially dangerous advantage.

“Everybody's long, so people had to sell, but we got a cleanup for different reasons,” Magadini said. “Rather than ‘selling the news,' we found a macro event that caused the crisis.”