Bitcoin’s futures market is seeing reduced participation as open interest falls toward its lowest level of the year, while the traders still holding leveraged positions are increasingly positioned for lower prices.
Futures open interest was around 652,000 BTC at the time of writing, according to CoinGlass, well below the roughly 800,000 BTC peak recorded earlier this year.
The decline points to a broader reduction in leveraged exposure, even as bitcoin posted a gain of about 40% during the third quarter.
Negative Funding Puts Focus on Shorts
Perpetual futures funding rates have returned to negative territory, averaging approximately minus 0.3% across major exchanges.
Funding rates provide an indication of which side of the perpetual market is more aggressive. While each long position corresponds to a short position, a negative funding rate means short sellers are paying longs to keep their bearish trades open.
That setup indicates that traders betting on bitcoin declines are currently willing to pay a premium to maintain their exposure.
The shift followed a roughly 2% decline in bitcoin to about $82,800 over a 24-hour period after President Donald Trump declined to rule out additional U.S. strikes on Iran ahead of the midterm elections.
Even after the pullback, bitcoin remains more than $20,000 above its summer cycle low and continues to rank as the best-performing asset of the third quarter.
Gold and Bitcoin Face Broader Pressure
The weakness has also appeared in traditional markets, with gold falling sharply alongside bitcoin.
Gold has lost about 3% over the past 24 hours and was trading near $4,150 an ounce. The bitcoin-to-gold ratio is approaching 20, a level that would leave it close to posting a positive return for the year.
Meanwhile, the U.S. dollar has strengthened, with the DXY index moving above 101 as Treasury yields continue their climb.
The 10-year Treasury yield has risen above 5.2%, while the 30-year yield has moved past 5.51%.
Treasury Yields Raise Competition for Crypto
A resilient U.S. economy could be supporting the dollar and Treasury yields, although persistent inflation concerns may also be contributing to higher borrowing costs.
Rising yields typically push bond prices lower. TLT, an ETF tracking long-duration U.S. Treasuries, has fallen to around $79, reaching an all-time low.
Higher Treasury yields can also increase the relative appeal of income-producing assets compared with bitcoin and gold, which do not provide regular interest payments to holders.
