Bitcoin’s ($BTC) Derivatives Market Power (DMP) has recently presented a significant recovery following a slump to significantly low levels. As per the data from Axel Adler Jr, the Derivative Market Power of Bitcoin ($BTC) has rebounded to -429K mark after plunging to -559K. As the prominent crypto analyst mentioned on social media, this shift reportedly suggests a gradual calming of bear pressure in the market. In addition to this, the respective trend also gets support from other indicators, including funding rates, unwinding short positions, as well as shrinking taker order polarity.
Bitcoin DMP Jumps Back after Hitting Historic Lows
The market data discloses that the Derivatives Market Power (DMP) of the flagship crypto asset signifies a notable bounce back. In this respect, the index has surged back to the -420K spot following a crash to -559K. The DMP is reportedly measured as Open Interest (OI) × Funding Rate × Taker-imbalance. Particularly, OI denotes the cumulative amount of exceptional futures contracts, while Funding Rate underscores the charges of holding the respective positions.
Additionally, Taker-imbalance calculates the net market sell and buy flows. In combination, these factors present a thorough outlook of the influence of derivatives on the spot market.
DMP Spike Indicates Potential Increase in Retail and Institutional Interest
According to Axel Adler Jr, the recent DMP surge is not only a technical shift, but it also highlights the changing trader sentiment. Thus, as the taker imbalances get narrower and funding rates calm, the aggressive shorting is minimized. Overall, this scenario could lead to relatively balanced trading conditions and could even result in a bullish reversal. Keeping this in view, the top crypto asset may be getting into a period of decreased market volatility, attracting retail and institutional interest alike.
