Data shows the Altcoin futures market has seen a decline in speculative engagement recently as the Open Interest has plummeted.
When the value of this metric rises, it means speculative activity around the cryptocurrency is going up. Generally, a higher amount of leverage raises the chances of the market turning volatile, so this kind of trend can lead to sharper price action.
Now, here is the heatmap shared by Glassnode that shows how the percentage change in the Open Interest (30-day rolling mean) has fluctuated across Bitcoin and the various altcoins over the past year:
As displayed in the above graph, the change in the Open Interest has been at notable negative values in the cryptocurrency sector since mid-October, indicating that there has been a decline in speculative positioning.
Bitcoin has still managed to maintain a relatively stable trend, but interest in altcoins has plummeted as the Open Interest is now near cycle lows. “This pattern underscores a defensive stance among traders, prioritizing capital preservation over speculation,” noted the analytics firm.
The Open Interest isn’t the only metric that implies a cooldown in speculative activity; another heatmap from the report points to the same.
From the chart, it’s visible that this metric has been witnessing a cooldown since mid-year, a sign that investors have been cautious about betting on a particular direction. “Overall, derivatives sentiment remains cautious, and liquidity continues to thin across the board,” explained Glassnode.
The fact that the altcoin market has witnessed a sharp decline in Open Interest while Bitcoin has managed to hold on implies investor attention has shifted to the less risky number one digital asset.
Ethereum, the largest among the altcoins, has taken to consolidation recently as its price is still trading around $3,500.
