Bitcoin Futures Build May Not Support a Rebound

Bitcoin futures open interest rose to 704,000 BTC this week, its highest level since Sept. 24, while weaker spot-market liquidity and about $2 billion in U.S. spot Bitcoin ETF outflows reduced buying support. Derivatives positions can increase gains during a recovery or losses during a decline, depending on spot-market demand.

Martin Lee of DWF Labs reported that futures open interest was about 12% below its 2026 high. At an illustrative price of $72,000, the contracts represented about $51 billion in gross notional value. Open interest measures outstanding contracts, including long positions, short positions and hedges. It does not measure new money entering the market.

Bitcoin options open interest recovered to 447,000 BTC after falling from Nov. 6 to Nov. 9. It remained 5% to 10% below October levels. Ethereum futures open interest has fallen about 30% since May, while Solana futures open interest has declined about 23% since June.

Glassnode reported on Nov. 11 that Bitcoin open interest had returned close to September levels while Bitcoin remained about 15% below its September high. The pattern is consistent with traders adding short positions during the decline. Short covering can lift prices, while forced closures can increase selling if prices fall.

Glassnode found that resting buy orders within 5% of Bitcoin’s price exceeded sell orders on Binance and Coinbase from Nov. 5. The largest concentration was between $68,000 and $72,500. Bitcoin fell below $72,000 on Nov. 12 and reached an intraday low near $71,255.

The orders depend on buyers leaving their bids in place and completing trades. About 35% of short-term-holder supply was profitable, while Bitcoin traded below the group’s cost basis of $75,600. CryptoQuant data showed profitable supply falling from more than 15 million BTC to about 11 million BTC.

The 30-day average Coinbase premium was negative and reached its deepest discount since February. Stablecoin supply fell by $14 billion over 30 days, its fastest decline since June 2022. U.S. spot Bitcoin ETFs recorded about $2 billion in net outflows from Nov. 2 through Nov. 11, including about $300 million on Nov. 11.

Lee identified dollar-debasement demand and broader risk appetite as sources of liquidity during previous Bitcoin rallies. In a note, he wrote that “debasement alone rarely sustains a rally when the broader market is risk-off.” He expects limited liquidity movement into crypto until uncertainty around the U.S. midterm elections and the expected December rate hike has cleared.

U.S. government debt offered investors another dollar-denominated asset. Two-year Treasury yields were near 4.835% and 10-year yields near 5.068% on Nov. 12. A $25 billion 30-year Treasury auction that day drew a 2.36 bid-to-cover ratio, down from 2.54 in October, and cleared at a 5.441% yield.

The 10-year auction on Nov. 10 drew a 2.46 bid-to-cover ratio, down from 2.77 in October. Indirect bidders received about 61.2% of competitive awards, compared with 80.3% in October. Dealers received 9.8%, up from 2.5%. The Treasury expects $618 billion in privately held net borrowing from October through December and $800 billion from January through March.

DWF Labs’ review of 694 trading days found a 0.54 correlation between ETF flows and Bitcoin’s return over the previous five days, compared with a 0.03 correlation with its next five-day return. ETF flows turned negative on the low day in seven of eight qualifying selloffs and positive on the peak day in seven of eight market tops. About 20% of historical ETF buying was linked to short hedges on the Chicago Mercantile Exchange.

Glassnode estimates Bitcoin’s True Market Mean at about $77,500 and a modeled liquidation-concentration zone between $59,500 and $62,600. The zone measures potential liquidation pressure and is not a price target.