Futures open interest in key cryptocurrencies has fallen sharply, indicating traders are reducing positions amid macroeconomic uncertainty.
Crypto traders are scaling back long positions as uncertainty builds, with futures open interest dropping sharply amid trade war worries and the Fed’s tough stance. In a March 4 post on X, Singapore-based blockchain firm Matrixport revealed that Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) futures have seen a huge drop in open interest.
“Notably, Ethereum’s open interest has dropped back to levels last seen in the summer of 2024. Despite Trump’s recent tweet about a potential Strategic Bitcoin Reserve and the upcoming White House Crypto Summit on March 7, the market remains in risk-off mode, with participants cutting exposure.”
Markus Thielen, independent analyst
The blockchain firm notes that many traders seem to be waiting for clearer signals before re-entering the market, with the Fed’s policies remain a key concern.
The warning comes as U.S. President Donald Trump said 25% tariffs on goods from Mexico and Canada will take effect from March 4, ramping up trade tensions and rattling financial markets.
In late February, Matrixport’s analysts warned that Bitcoin’s price could stay under pressure until April due to a stronger U.S. dollar and shifting market dynamics. With Bitcoin becoming more tied to traditional finance, the analysts now expect the price downturn to last until April. After the correction, Bitcoin could try to bounce back to previous highs, they add.
Matrixport also noted the growing role of Wall Street investors. While wealth and asset managers see Bitcoin as a long-term investment, hedge funds are using arbitrage strategies to profit from Bitcoin’s volatility. Per Matrixport, these hedge funds “collectively hold $10 billion in Bitcoin ETFs, and with total inflows reaching $39 billion, this suggests that at least 25% of Bitcoin ETF capital is tied to arbitrage trades.”
