Yonsei_dent2024-03-11

<Increasing Volatility, Growing Risks for Retail Investors>

The open interest in the derivatives market has reached an all-time high, surpassing the 2021 ATH level of 17.05 billion seen in March. This signifies both an increase in market participation by investors and heightened price volatility. The funding rate has recorded highs of +0.08 to +0.10 over the past two weeks, reminiscent of the strong bull market seen at the end of 2020 into early 2021. It appears undeniable that the market is overheated, much like the situation with open interest. What sets this cycle apart from previous ones is the influx of significant institutional capital through ETFs. This has resulted in relatively smaller corrections in this bull market compared to past ones. However, this shift poses a risk for retail investors, making them more vulnerable to the moves of institutional forces, such as Smart Money. As demonstrated by the momentary dumping from $68k to $63k on March 5th, where large-scale liquidation of long positions occurred, it's a time when one must exercise extreme caution regarding volatility risks.