Bitcoin’s derivatives market entered September with a split message: traders are taking on more positions, but the balance of trading activity is leaning against price strength.
This shows that while more leverage is in play, conviction in the market has not been strong enough to push the price higher.
Funding rates further confirm this. In perpetual futures markets, traders who are long pay a funding fee to those who are short when demand for leverage tilts upward. On September 3, the daily funding rate was 1.73%, with the seven-day average at 1.21% and the thirty-day average at 0.96%.
Funding was positive every single day for the past month, which means longs have been consistently paying to maintain exposure. This creates a costly environment for traders betting on upside, especially when prices are not moving in their favor.
Paying higher carry costs without price gains usually forces fast-moving accounts to reduce risk unless something shifts the balance.
Trading activity itself explains why the price has been heavy. A useful gauge is the taker buy/sell ratio, which compares the volume of market orders buying contracts versus selling them. When the ratio is below one, it means more traders are hitting the sell button aggressively.
On September 3, the ratio was 0.913, very close to the 30-day average of 0.965.
Net flow from these market orders was firmly negative: −$9.81 billion across the past month, including −$1.75 billion in the last week. In other words, the traders who moved the price by crossing the spread were mainly selling.
The importance of this is clear in the statistics: over the last 90 days, daily returns correlated strongly with net taker flow (0.76) and the taker ratio (0.64). In contrast, open interest and funding showed almost no link to daily returns.
Liquidation data shows us where most of the losses come from. In the past 30 days, $17.68 billion in long positions were liquidated compared to $8.33 billion in shorts, meaning 68% of liquidations fell on longs. The biggest event came on August 25, when $4.32 billion in longs were wiped out as Bitcoin fell 3.04% in one day.
The next session saw a 1.52% rebound, a common pattern after major liquidations as the market stabilizes. Another wave hit on August 29 with $2.40 billion in long liquidations during a 3.72% drop, followed again by a small rebound.
On the short side, August 11 brought a $1.61 billion wipe as Bitcoin gained, followed by another gain the next day. A similar move happened on September 1, when $670 million in shorts were liquidated into a nearly 1% daily increase that extended another 1.79% the following session.
These episodes show the imbalance in positioning. The market has been more heavily long, so pullbacks trigger large long-side liquidations and quick rebounds. Short wipes occur, but they are smaller in scale and less frequent.
As long as aggressive trading continues to come from the sell side, rallies will be hard to sustain.
The scale of trading also puts this into perspective. In the last 30 days, gross taker flow (the combined value of market buy and sell orders) reached about $490.71 billion. Compared to this, open interest of $41.19 billion equals just 8.39% of recent trading turnover.
That ratio shows the current stock of positions is small relative to recent flow, meaning positions could expand rapidly if sentiment flips. But for now, the imbalance between who holds contracts and who trades most aggressively keeps pressure on the market.
The picture hasn’t changed much in the shorter term either. Over the last week, Bitcoin fell 0.25%, open interest added 2.85%, and net taker flow was negative by $1.75 billion.
Funding costs climbed further, hitting 1.73% on the last day. Together, these show more contracts being opened, longs paying higher fees to keep them, and traders still hitting the sell side, a combination that holds the price down.
The execution data (taker flows and liquidations) is what’s steering returns. Open interest and funding show how much leverage is in the system and how expensive it is to hold, but they don’t drive the day-to-day moves.
For that, the key signal is who is crossing the spread. A sustained period where the taker ratio rises above one, combined with positive net taker flow, would be the first sign of a shift.
Until then, the market will remain prone to long-side liquidations and reflexive rallies rather than durable gains.
