The crypto derivatives market experienced a shock: open interest in BTC and ETH collapsed amid the Fed's decision.
On June 17, the derivatives market on Binance experienced a massive "flush" of leverage. Open interest in Bitcoin (BTC) plummeted by 18%, and in Ethereum (ETH) by as much as 25%. The reason is the decision by the U.S. Federal Reserve (Fed) to keep the key interest rate unchanged. This is not just a correction, but a signal of a shift in sentiment among major players.
Open Interest is the total volume of unsettled contracts. Its sharp decline means that traders are massively closing positions and reducing risks, rather than increasing their bets. This is exactly the picture we are seeing.
According to my analysis of data from Binance, open interest in Bitcoin fell from $4.51 billion to $3.7 billion. Approximately $810 million in leveraged positions exited the market. This is one of the most notable short-term drops in BTC positioning on this exchange in recent times.
Ethereum showed an even more aggressive decline in percentage terms. Open interest in ETH on Binance dropped from $2.8 billion to $2.1 billion, removing about $700 million from the market. The current level is close to values from the end of February. This indicates that leverage on Ethereum was being shed more actively than on Bitcoin.
In total, on Binance alone, nearly $1.5 billion in open interest for BTC and ETH "disappeared" within a short period. This is not a sell-off of a single asset, but a general reduction in risk appetite.
Why is this linked to the Fed?
The leverage flush coincided with the Fed's decision to keep the rate at 3.75%. Although this decision removed one layer of uncertainty, derivatives traders, apparently, did not want to hold large leveraged positions during the announcement itself and the volatility that often follows such macroeconomic events.
Market participants chose to close positions before and after the Fed decision to avoid being leveraged during a potential sharp market reaction. The simultaneous decline in both Bitcoin and Ethereum confirms that this was a broad risk-off move, not a targeted attack on a single asset.
The decline was not limited to Binance. On the Gate.io exchange, Ethereum contracts also came under pressure — open interest there fell again to approximately $1.9 billion. This is another sign that the leverage reduction occurred across all major crypto exchanges.
My expert commentary: This "flush" is a classic reaction to macroeconomic uncertainty. Traders overloaded with long positions are taking profits and reducing risks ahead of a potentially volatile period. As long as the Fed rate remains high, I expect the derivatives market to stay under pressure, and the recovery of open interest could take weeks, not days. This is not a bearish signal for the spot market, but a clear sign that "smart money" currently prefers cash over leverage.