Bitcoin’s derivatives market is losing leveraged exposure, with futures open interest approaching its lowest point of the year. The traders who remain active are also showing a greater willingness to maintain bearish positions.

Open interest was around 652,000 BTC at the time of writing, according to CoinGlass data. That compares with approximately 800,000 BTC at the market’s peak earlier this year.

The decline indicates that traders have been scaling back leveraged futures activity despite bitcoin advancing roughly 40% during the third quarter.

Futures Funding Turns Against Longs

Perpetual futures funding rates have once again moved into negative territory, averaging about minus 0.3% across leading exchanges.

Funding rates help identify which side of the market is driving demand. Since every long is paired with a short, a negative rate means short sellers are paying long traders to keep their positions open.

In effect, traders expecting bitcoin to fall are accepting a funding cost in exchange for maintaining their short exposure.

The change in derivatives positioning comes after bitcoin declined around 2% to $82,800 within 24 hours. The move followed President Donald Trump’s decision not to rule out additional strikes against Iran before the U.S. midterm elections.

Bitcoin nevertheless remains more than $20,000 above its summer cycle low and continues to be the strongest-performing asset in the third quarter.

Dollar Strength Weighs on Gold

The pressure has not been limited to bitcoin. Gold has also declined about 3% over the same 24-hour period, trading near $4,150 per ounce.

The bitcoin-to-gold ratio is approaching 20, measuring the amount of gold that one bitcoin can purchase. At that level, the ratio would be close to turning positive for the year.

The dollar has meanwhile strengthened, with the DXY index climbing above 101 as U.S. government bond yields rise.

The 10-year Treasury yield is above 5.2%, while the 30-year yield has moved beyond 5.51%.

Higher Yields Boost Income-Producing Assets

A resilient U.S. economy may be helping support both the dollar and Treasury yields, although continued inflation concerns could also be contributing to higher borrowing costs.

Higher yields generally translate into lower prices for existing bonds. TLT, an ETF holding long-term U.S. Treasury securities, has dropped to roughly $79, marking an all-time low.

The increase in yields also makes interest-bearing investments relatively more attractive than bitcoin and gold, neither of which generates income for investors simply by being held.