Executive Summary:
Binance, Bybit and OKX remain the industry leaders for perpetual swap markets, accounting for around 84% of the total open interest.We introduce a novel model to track the sensitivity of leverage and Open Interest in Futures markets relative to changes in the spot Bitcoin price.Price has climbed back above the Short-Term Holder cost basis, which has provided much-needed relief for new investors, with over 75% of their supply moving back into profit.
Perpetual Pivots
The perpetual futures markets are the deepest and most liquid trading venue for digital assets. The trade volume is often orders of magnitude greater than spot markets, and it is a preferred instrument for executing trades, speculative positions, and arbitrage strategies.
In this section, we aim to introduce a framework which utilizes the perpetual futures market to identify market pivot points. It seeks to identify points where over-leveraged speculators are liquidated during a bull market correction.
In 2024, open interest across perpetual futures has ranged between 220k and 240k BTC. This value often decreases quickly during deleveraging events and increases during more speculative periods. More recently, open interest has risen into the 260k to 280k BTC range, indicating an elevated appetite for speculation since early June.
To better understand the mechanics of the perpetual markets, we have measured the share of the top three exchanges by open interest.
As shown below, Binance, Bybit and OKX comprise around 84% of the market share, and will therefore, focus on metrics related to these exchanges for our analysis.
A pivot point in the perpetual market usually involves a considerable reduction in open interest, often a direct result of margin call liquidations of traders holding highly leveraged positions.
The chart below highlights periods where open Interest of the top three exchanges dropped more than 5% over a weekly period. Over the last 12 months, we have encountered ten of these perpetual futures flush-out events.
To assess the size of contracts forcefully closed, we measure the total liquidation volume during these deleveraging events. The chart below shows that the overall liquidation volume (both long and short) surged above the typical bull market baseline of $200M/day. This demonstrates the role of margin call liquidations in the open interest decline noted in the chart above.
Directional Bias
During market turmoil, deleveraging events can occur when the market moves in either direction. However, in this instance, we are exclusively isolating for potential pivot points during the bull market corrections and have therefore segregated the liquidations into two subsets:
🟢 Long-Dominant Liquidations where more than 50% of liquidated positions were on the long side of the contract🔴 Short-Dominant Liquidations where more than 50% of liquidated positions were on the short side of the contract
During the recent sell-off to $55k, we can see an ideal long liquidation candidate pivot point was recorded. Here, over-leveraged long positions were liquidated, which led to a sharp decline in open interest across the top three perpetual futures exchanges.
Next, we can establish a framework to spot these pivot points using the perpetual funding rate. This approach utilizes the 7-day moving average of funding rates across the top three exchanges.
This is an extremely insightful metric which provides information on the directional bias of positions within perpetual markets. When the weekly average of the funding rate is above the neutral level (0.01% per 8 hours), it suggests there is a large demand from market takers to open a long position.
After setting the current ATH at $73k in March 2024, there has been waning demand for long positions across perpetual markets. Alongside this, the second attempt at rallying above $73k in May saw sentiment briefly switch to positive. However, the overall sentiment regime has remained neutral to negative since then.
The latest rally from the $54k region has been a great example of over-leveraged long positions being liquidated near the local lows. Funding rates residing below the 0.01% neutral level suggest that there has not been a rush for new long positions to open since the July low was established.
Short-Term Profitability Improves
The recent price surge has also been a welcome relief for Bitcoin Short-Term Holders (STHs), a proxy for new demand and recent buyers. This cohort saw over 90% of their supply fall into a loss in late July, putting them into a financially stressful position.
This rally has now broken back above the STH cost basis and returned 75% of their held supply to an unrealized profit. This can be seen within the STH-MVRV metric, which has now recovered above the break-even level of 1.0.
We can increase the granularity of this assessment by inspecting the individual age breakdowns of the Short-Term Holder MVRV metric. We can use this lens to see how profitability has changed across sub-groups of recent buyers. The ages we analyze range from very recent buyers (1-day to 1-week), right through to those on the brink of transitioning into Long-term Holder status (3 to 6-months).
🔴 1d-1w MVRV: 1.05🟠 1w-1m MVRV: 1.1🔵 1m-3m MVRV: 1.0🟣 3m-6m MVRV: 1.07
At present, all constituents of the Short-Term Holder cohort have returned to positive profitability, which highlights the strength of the prevailing uptrend. This is likely to be positive for overall investor sentiment.
Finally, we can evaluate the net realized profit/loss for each sub-cohort, which can be considered a measure of net capital flows. This metric also shows signs of constructive improvement, with most age constituents experiencing a positive capital flow, with the only exception being bar the 1m-3m cohort.
This 1m-3m cohort has carried the brunt of the recent range-bound and downside price action and is also one of the larger age bands in this study.
Summary and Conclusions
Perpetual futures markets are the most liquid and deep instruments within the digital asset markets, making them a valuable market information source. As BTC prices traded down into the $53k region, it resulted in a meaningful deleveraging event, as many long-biased traders were liquidated near the lows.
The recovery price bounce has also been very strong, returning a majority of Short-Term Holders to an unrealized profit. This has provided much-needed financial relief and is supported by a period of net positive capital inflows over recent weeks.
Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.
Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.
Join our Telegram channelFor on-chain metrics, dashboards, and alerts, visit Glassnode StudioFor automated alerts on core on-chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter Bitcoin prices have rebounded strongly, rallying over $68k and catalyzing an uptick in perpetual futures activity. The appreciation in price has also provided much-needed relief for the Short-Term Holder cohort, with 75% of their coins now held in profit.
Amazon.com: Its Role in the U.S. Industry
Introduction
Amazon.com, often simply referred to as Amazon, has transformed from an online bookstore into a colossal global conglomerate that has fundamentally altered the landscape of retail, technology, and numerous other industries. Founded in 1994 by Jeff Bezos, Amazon’s rapid growth and diversification have made it a central player in the U.S. economy. Its impact is felt across various sectors, including e-commerce, logistics, cloud computing, entertainment, and even artificial intelligence. This article explores Amazon’s role in the U.S. industry, examining its influence, achievements, and the challenges it faces.
The Rise of Amazon.com
Origins and Early Growth
Amazon began as an online bookstore in Bezos’s garage in Bellevue, Washington. The vision was simple but revolutionary: to create an online platform where people could buy books. Bezos recognized the potential of the internet to disrupt traditional retail and chose books as his starting point due to their wide appeal and ease of distribution. By offering a vast selection and competitive prices, Amazon quickly gained a foothold in the market.
The company’s initial public offering (IPO) in 1997 marked the beginning of its journey toward becoming a dominant player in the U.S. and global markets. Amazon’s early success was driven by its focus on customer satisfaction, an extensive inventory, and a commitment to fast and reliable delivery. This focus laid the foundation for its expansion into other product categories and services.
Diversification and Expansion
Amazon’s diversification strategy began with the introduction of new product categories, such as electronics, toys, and apparel. This move positioned Amazon as a one-stop shop for consumers, significantly expanding its customer base. The company also introduced its marketplace platform, allowing third-party sellers to offer their products alongside Amazon’s own inventory. This not only increased the variety of products available but also created a new revenue stream for the company through commissions on sales.
One of the most significant milestones in Amazon’s diversification was the launch of Amazon Web Services (AWS) in 2006. AWS provided cloud computing services to businesses, enabling them to rent computing power and storage rather than investing in expensive infrastructure. This service quickly became a cornerstone of Amazon’s business, contributing significantly to its profitability and establishing Amazon as a leader in the tech industry.
Amazon’s Role in E-Commerce
Transforming Retail
Amazon’s impact on the retail industry cannot be overstated. It has revolutionized the way consumers shop, shifting much of retail activity from brick-and-mortar stores to online platforms. The convenience of shopping from home, coupled with Amazon’s vast selection and competitive pricing, has led to a fundamental change in consumer behavior. This shift has forced traditional retailers to adapt, leading to the rise of omnichannel strategies that integrate online and offline sales.
The concept of “one-click shopping,” patented by Amazon in 1999, further streamlined the online shopping experience. This innovation reduced the friction in the purchasing process, contributing to higher conversion rates and reinforcing Amazon’s dominance in e-commerce. Additionally, Amazon Prime, launched in 2005, offered customers free two-day shipping and other benefits for an annual fee, further solidifying customer loyalty and increasing the frequency of purchases.
Impact on Small Businesses
While Amazon has provided opportunities for small businesses through its marketplace platform, it has also posed challenges. On the one hand, small businesses gain access to a vast customer base and the logistics infrastructure that Amazon offers. On the other hand, they face intense competition, not only from other third-party sellers but also from Amazon itself. The company’s ability to undercut prices and its control over the marketplace platform have led to concerns about fairness and market power.
Moreover, Amazon’s algorithms and data-driven approach to retail have raised questions about the transparency of how products are promoted and priced on the platform. Small businesses often struggle to achieve visibility without spending on Amazon’s advertising services, which can be costly. Despite these challenges, many small businesses continue to rely on Amazon as a vital sales channel, underscoring its central role in the U.S. retail industry.
Amazon in the Logistics and Supply Chain Industry
Revolutionizing Logistics
Amazon’s impact extends beyond retail into logistics and supply chain management. To fulfill its promise of fast and reliable delivery, Amazon has invested heavily in building a sophisticated logistics network. This network includes a vast network of fulfillment centers, advanced robotics, and a growing fleet of delivery vehicles, including drones.
Amazon’s logistics capabilities have set new standards for the industry. The company has pushed the boundaries of what is possible in terms of speed and efficiency, challenging traditional logistics providers like FedEx and UPS. Amazon’s commitment to customer satisfaction has driven innovations such as same-day and even one-hour delivery in select areas, further raising consumer expectations.
In-House Logistics Services
In recent years, Amazon has taken steps to reduce its reliance on third-party logistics providers by expanding its in-house delivery capabilities. The launch of Amazon Logistics, a service that uses independent contractors to deliver packages, is a testament to this strategy. This move has enabled Amazon to exert greater control over the delivery process and reduce costs.
However, this expansion has not been without controversy. Amazon’s use of independent contractors has sparked debates about labor practices and the gig economy. Critics argue that Amazon’s business model places financial and physical burdens on its delivery drivers, who are often classified as independent contractors rather than employees. This classification exempts Amazon from providing benefits and protections typically afforded to employees, such as health insurance and minimum wage guarantees.
Amazon Web Services: The Backbone of the Internet
Dominating Cloud Computing
Amazon Web Services (AWS) has emerged as one of the most significant contributors to Amazon’s success. As the leading provider of cloud computing services, AWS powers a vast portion of the internet, supporting everything from startups to large enterprises. Its services include computing power, storage, databases, machine learning, and more.
AWS’s dominance in cloud computing has had a profound impact on the tech industry. By providing scalable and cost-effective solutions, AWS has lowered the barriers to entry for new businesses, fostering innovation and entrepreneurship. Companies no longer need to invest heavily in physical infrastructure; instead, they can rent the necessary resources on demand from AWS.
Economic Impact and Innovation
The success of AWS has not only boosted Amazon’s financial performance but also contributed to the broader U.S. economy. AWS has created jobs, driven innovation, and supported the growth of numerous tech companies. Its services have become integral to the operations of many businesses, from streaming services like Netflix to financial institutions and government agencies.
AWS’s role in advancing technologies such as artificial intelligence and machine learning has also been significant. By making these technologies accessible through cloud services, AWS has enabled companies to develop new applications and services that were previously out of reach. This has spurred growth in sectors such as healthcare, finance, and entertainment.
Amazon’s Influence on Entertainment and Media
Amazon Studios and Prime Video
Amazon’s foray into the entertainment industry began with the launch of Amazon Studios and Prime Video. These platforms have become key players in the streaming wars, competing with giants like Netflix, Disney+, and HBO Max. Amazon Studios produces original content, including critically acclaimed series like The Marvelous Mrs. Maisel and The Boys, as well as feature films.
Prime Video, available as part of the Amazon Prime membership, has become a major driver of subscriber growth. By offering a mix of original content and licensed programming, Amazon has been able to attract a diverse audience. The company’s investment in high-quality content has not only boosted its streaming service but also positioned it as a significant player in Hollywood.
Impact on the Publishing Industry
Amazon’s origins as an online bookstore continue to influence the publishing industry. The company has become the largest bookseller in the world, both in physical books and e-books. The Kindle, Amazon’s e-reader, revolutionized the way people consume books, making digital reading mainstream.
However, Amazon’s dominance in the book market has raised concerns among publishers and authors. The company’s pricing strategies and negotiation tactics have led to disputes over revenue sharing and control. Amazon’s influence over the publishing industry extends to self-publishing, where its Kindle Direct Publishing platform allows authors to bypass traditional publishers and reach readers directly. While this has democratized publishing, it has also led to an oversaturation of the market and challenges in quality control.
Challenges and Criticisms
Regulatory Scrutiny
Amazon’s immense size and influence have made it a target for regulatory scrutiny. In the U.S. and abroad, lawmakers and regulators have raised concerns about the company’s market power, labor practices, and treatment of third-party sellers. Antitrust investigations have been launched to determine whether Amazon engages in anti-competitive behavior, such as favoring its own products over those of third-party sellers on its platform.
The company’s expansion into various industries has also led to concerns about its dominance and potential to stifle competition. Critics argue that Amazon’s control over data, logistics, and retail gives it an unfair advantage, making it difficult for smaller companies to compete. In response, there have been calls for greater regulation and even the potential breakup of Amazon into smaller entities.
Labor Practices and Workers’ Rights
Amazon’s labor practices have come under intense scrutiny, particularly in its fulfillment centers and delivery network. Reports of grueling working conditions, high injury rates, and inadequate breaks have sparked widespread criticism. Workers have organized protests and strikes, demanding better pay, safer working conditions, and the right to unionize.
The company’s use of technology to monitor and manage workers has also raised ethical concerns. Amazon’s reliance on algorithms to track productivity and enforce performance targets has been criticized for creating a dehumanizing work environment. The company’s resistance to unionization efforts has further fueled debates about workers’ rights and corporate responsibility.
Environmental Impact
As one of the largest companies in the world, Amazon’s environmental impact is significant. The company’s vast logistics network and rapid delivery services contribute to carbon emissions and packaging waste. Amazon has faced criticism for its role in driving consumerism and its contribution to environmental degradation.
In response, Amazon has pledged to become more sustainable. The company launched the Climate Pledge in 2019, committing to reach net-zero carbon emissions by 2040. Amazon has also invested in renewable energy, electric delivery vehicles, and sustainable packaging. While these efforts are a step in the right direction, critics argue that more needs to be done to address the environmental impact of the company’s operations.
