Bitcoin Derivatives Reserve Surges Up, More Volatility Soon?

Keshav Verma

Last Updated: June 11, 2024 2:23 pm

3 mins read

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On-chain data shows the Bitcoin derivatives exchange reserve has surged up recently, a sign that the crypto may face more volatility in the near future.

Bitcoin Derivatives Exchange Reserve Observes Uplift Over Last Two Days

As pointed out by an analyst in a CryptoQuant post, conditions seem to be brewing up in the BTC market that could lead to higher volatility in the price.

The “derivatives exchange reserve” is an indicator that measures the total amount of Bitcoin currently sitting in the wallets of all derivatives exchanges.

When the value of this metric goes up, it means investors are depositing their coins into these exchanges right now. Since BTC going up on derivatives generally leads to an increase in leverage, such a trend can result in higher volatility in the price of the crypto.

On the other hand, the value of the indicator registering a decline implies coins are exiting derivatives exchanges as holders are withdrawing them. This kind of trend may precede a more calmer BTC price.

Now, here is a chart that shows the trend in the Bitcoin derivatives exchange reserve over the past few weeks:

The value of the metric seems to have climbed up in recent days | Source: CryptoQuant

As you can see in the above graph, the Bitcoin derivatives exchange reserve has seen some upwards momentum during the last couple of days. This shows that leverage in the market is now going up.

The chart also includes data for the mean value of the BTC transaction fees (in USD), and it looks like this metric also saw a spike during the past day, suggesting there have been some big moves in the market.

Below is another graph, this time including the trend for the BTC funding rates:

The funding rates have gone up over the past day | Source: CryptoQuant

As is apparent from the chart, the funding rates have jumped into positive values with this increase in the derivatives reserve.

This means that the investors sending coins to these exchanges have opened up long contracts, thus shifting the market balance into a long-dominant environment.

In the past, the combination of positive funding rates along with high derivatives reserve has usually meant high near term volatility for Bitcoin, with the price generally falling down.

BTC Price

At the time of writing, Bitcoin’s price floats around $20k, down 8% in the past week.

Looks like the value of the crypto has been moving sideways during the last few days | Source: BTCUSD on TradingView

Featured image from Yiğit Ali Atasoy on Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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