The data collector of the cryptcoin market Glassnode reported that the amount of Bitcoin (BTC) being hobbled in the centralised exchanges has been reduced to a minimum of 12 months.
The drop in reserves comes amid several recent open interest records in Bitcoin futures contracts, suggesting that many traders may be in debt.
Boom DeFi: Balancer echoes Compound with 235% rise on day one
Less than 15% of Bitcoin is kept in the exchanges
On 24 June, Glassnode recorded a further annual decline in the number of Bitcoin System on stock exchanges, with over 2.624 billion BTCs. As such, the amount of Bitcoin held in centralized exchanges has fallen by 10% since February of this year.
The decline in currencies held on the exchange came amid increased open interest (OI) in the future of Bitcoin, with Glassnode noting a new three-month high for OI on Bitfinex on the same day.
With the second quarter coming to an end, Bitcoin’s quarterly returns remain green
Bitcoin’s combined OI in the major futures markets topped $1 billion for the first time during May, before rising rapidly by another 50% to $1.5 billion earlier this month.
The increase was driven, in part, by increased activity in the Chicago Mercantile Exchange (CME) BTC markets, with volume up 1,000% in May.
Is DeFi diverting currencies from the exchanges?
However, the combination of expanding open interest and declining trading on the exchanges suggests that many traders may be heavily in debt, with open interest continuing to expand despite the apparent drop in available reserves.
Compund token suffers heavy losses but continues to lead DeFi
The growing popularity of the DeFi protocols may also have contributed to the drop in the number of currencies floated on exchanges. According to DeFi Pulse, the total value of assets blocked in DeFi projects has more than doubled, from $700 million to $1.6 billion since mid-January.
Investors using synthetic Bitcoin to access Ethereum’s DeFi applications may also be using futures to protect their underlying assets, as well as speculators seeking to lock in the fiduciary value of their holdings amid the recent uneven consolidation in the BTC markets.