Martin Lee of DWF Labs noted that Bitcoin futures open interest stood at 704,000 $BTC this week, its highest level since Sept. 24, while liquidity in spot markets continued to thin.
Meanwhile, the Treasury's $25 billion 30-year bond auction on Nov. 12 drew a 2.36 bid-to-cover ratio, down from 2.54 in October. It cleared at 5.441%, compared with a when-issued yield of 5.437%, a 0.4-basis-point tail.
The 10-year sale two days earlier showed a steeper decline, with a bid-to-cover ratio of 2.46, compared with 2.77 in October.
The 10-year bond cleared at 5.02%. Indirect bidders took about 61.2% of competitive awards, compared with 80.3% in October, while dealers took 9.8%, compared with 2.5%. The 3-year sale on Nov. 9 drew 2.53, compared with 2.62.
The 30-year result was within the range of recent sales, as the new issue in August drew 2.39. The Treasury said on Nov. 4 that demand for short-term bills remained strong. The auctions therefore point to weaker appetite for duration, while a retreat from US debt would be a broader claim.
The Treasury expects $618 billion in privately held net borrowing from October through December and $800 billion from January through March. The $125 billion in 3-, 10- and 30-year refunding sales raises about $28 billion in new cash.
On Nov. 12, two-year yields near 4.835% and 10-year yields near 5.068% made cash and government debt more competitive with Bitcoin.
The 10-year fell 0.31, compared with 0.18 for the 30-year and 0.09 for the 3-year. October’s 10- and 30-year sales reopened existing securities, while November’s sales were new issues.
Two sources of liquidity for Bitcoin
Lee describes demand driven by dollar debasement and broader risk-on flows as two supports for Bitcoin in past rallies. Both helped during the 2020 to 2022 cycle. In August, the debasement narrative helped Bitcoin hold up while AI stocks corrected.
He shared in a note:
“The limitation is that debasement alone rarely sustains a rally when the broader market is risk-off.”
He sees little chance of liquidity rotating into crypto until uncertainty around the midterms and a near-certain December hike passes. Adoption continues: Airwallex is launching its own chain, and the NYSE is advancing a tokenized stock platform.
Lee said Bitcoin options open interest recovered to 447,000 $BTC from a dip between Nov. 6 and Nov. 9, though it remains 5% to 10% below October. Bitcoin futures open interest is about 12% below its 2026 high, while Ethereum's is down about 30% since May and Solana's about 23% since June.
At an illustrative price of $72,000, 704,000 $BTC represents about $51 billion in gross notional value. Open interest counts outstanding contracts, each with a buyer and a seller. It therefore combines long bets, short bets and hedges, and measures positioning rather than fresh capital.
Glassnode noted on Nov. 11 that open interest had rebuilt toward September levels while Bitcoin remained about 15% below its September high. The pattern is consistent with traders adding shorts during the decline.
Futures can amplify a rebound through short covering or a decline through forced closures. Either outcome depends on spot liquidity.
The spot evidence
Glassnode's Nov. 11 analysis found that since Nov. 5, resting bids within 5% of the price outweighed asks on Binance and Coinbase. The largest concentration was between $68,000 and $72,500.
Wallets holding 100 to 1,000 $BTC and 1,000 to 10,000 $BTC are accumulating, while other cohorts are distributing. A resting bid signals willingness to buy, but whether purchases follow depends on the bid remaining in place, as bids can be pulled or overwhelmed.
Bitcoin fell below $72,000 on Nov. 12, reaching an intraday low near $71,255 and entering the upper part of that band.
About 35% of short-term holder supply is in profit, and Bitcoin is trading below the $75,600 short-term holder cost basis. CryptoQuant reported that profitable supply fell from more than 15 million $BTC to about 11 million.
The 30-day average Coinbase premium is negative, at its deepest discount since February. Stablecoin supply contracted by $14 billion in 30 days, the fastest contraction since June 2022.
Farside Investors recorded about $2 billion in US spot ETF outflows from Nov. 2 through Nov. 11, including $300 million on Nov. 11.
Lee argued:
“We've seen outflows accelerate at the bottoms and inflows accelerate at the tops.”
In its Oct. 22 study of 694 trading days, DWF Labs found ETF flows correlated 0.54 with Bitcoin's return over the previous five days and 0.03 with its return over the following five days. Flows turned negative on the low day in seven of eight qualifying selloffs and positive on the peak day in seven of eight tops.
Historically, about 20% of ETF buying was tied to CME short hedges.
Glassnode puts the True Market Mean near $77,500, a modeled six-month liquidation concentration between $59,500 and $62,600, a June low near $58,500 and a short-liquidation cluster near $87,500.
A recovery would have stronger backing if buyers absorb selling in the $68,000 to $72,500 band, Bitcoin regains $75,600 and $77,500, the Coinbase premium turns positive and stablecoin supply starts growing again. That combination could make futures positioning fuel for a rebound.
If bids give way while holder profitability erodes and stablecoin supply continues to contract, leveraged positions could amplify a decline. Glassnode's modeled $59,500 to $62,600 zone marks a possible area of liquidation pressure, not a price target.
