Bitcoin Derivatives Reserve Surges Up, More Volatility Soon?

According to on-chain data, the Bitcoin derivatives Exchange Reserve has risen in recent times. This is a signal that crypto could face greater volatility in the future.

Bitcoin Derivatives Exchange Reserve Observes Uplift Over Last Two Days

A CryptoQuant analyst noted that conditions are brewing in BTC markets, which could result in higher volatility.

The “derivatives exchange reserve” is an indicator that measures the total amount of Bitcoin currently sitting in the wallets of all derivatives exchanges.

This metric is worth more than it costs, so investors will deposit their money into these exchanges if the value goes up. This can lead to higher volatility of crypto prices, as BTC rising on derivatives tends to increase its leverage.

However, a declining indicator value could indicate that coins are leaving derivatives exchanges and their holders are withdrawing them. This trend might precede a lower BTC price.

Below is a chart that illustrates the trends in Bitcoin derivatives’ exchange reserves over the past weeks.


 Source: CryptoQuant| Source: CryptoQuant

You can see that Bitcoin derivatives’ exchange reserve is showing some momentum over the past few days. This is a sign that market leverage is rising.

This chart includes data on the average value of BTC transaction fees in USD. It looks like that metric saw an increase over the previous day. That suggests there were some major moves in the market.

Another graph is below, which shows the trend of the BTC funding rate rates.


 Source: CryptoQuant| Source: CryptoQuant

The chart shows that the funding rates are now at positive levels due to the increase in derivatives reserves.

This is because the coins sent to the exchanges by investors have created long contracts that shift the market’s balance towards a stable environment.

The combination of high derivatives reserves and positive funding rates has in the past led to high volatility, which resulted in Bitcoin’s price falling.

BTC Prices

At the time of writing, Bitcoin’s price floats around $20k, down 8% in the past week.

Bitcoin Price Chart

It seems like crypto's value has moved sideways in the past few days. Source: TradingView, BTCUSD.| Source: BTCUSD on TradingView
Featured image from Yiğit Ali Atasoy on, charts from,

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