CRYPTO

CME Bitcoin Futures Open Interest Reaches 8 Month Highs, While BTC Priced at K 65K


Open Interest (OI) for Bitcoin (BTC) futures trading on the Chicago Mercantile Exchange (CME) hit a new record high on Thursday as BTC recovered its five-month high of, 58,550 on the bitstamp.

The total number of outstanding derivatives deals in CME Group’s Bitcoin futures market reached 3.22 billion, just below the record 40 40 million in February 2021, according to data provided by ByBt.com. Bitcoin peaked in mid-April.

In detail, Bitcoin Future OI at CME was 14 3.02 billion on April 14, the day BTC’s price – reached around 65 65,000. But on Thursday, the OI was 6% higher than the reading from mid-April, even as BTC was priced between $ 57,000- $ 58,550

CME Bitcoin Future Open Interest. Source: ByBt.com

Traders often use OI as an indicator to confirm trends in both derivatives and spot markets. For example, it is explained that new money is coming into the market regardless of the growing number of outstanding derivatives contracts.

Meanwhile, in the case of Bitcoin, the growing open interest in the futures market indicates an increase in BTC exposure to recognized investors.

The commercial sector increases Bitcoin futures exposure

Recent OI readings indicate that more institutional capital is entering the bitcoin market. As a result, investors have become more confident about opening new positions in the $ 50,000- $ 58,000 price range, with CME volumes trending higher over the past seven days.

Bitcoin Futures – Volume and Open Interest. Source: CME

Analysts see consistent growth across OI, volume and price as signs of new buying in the futures market. This puts the underlying resources in a better position to continue its improvement. So it seems that Bitcoin is going through a similar upward trend.

The main evidence of a bright bitcoin comes from the Commodity Futures Trading Commission record released on October 5th. It noted that the commercial sector – which includes corporate hedgers – has accelerated their bitcoin futures purchases; They now hold a net position of over 10,000 BTCs.

CME BTC Future Exposure Change. Source: CFTC, Forbes

At the same time, however, hedge funds and retail investors have narrowed the net in the bitcoin futures market. Nevertheless, it may be their strategy to offset long positions elsewhere, such as in the spot market.

This is mainly due to the higher annual premium available on CME Bitcoin futures prices on the spot market. In recent days, CME Bitcoin futures prices have been regularly trading above 15% of the BTC spot price, compared to an average of 7.7% in the first nine months of 2021.

Bitcoin futures premium against spot prices. Source: Skew

The macro fundamentals behind the Bitcoin revival

Recent purchases in the Bitcoin spot market also appeared in the wake of statements from U.S. regulators.

For example, Gary Jensler, chairman of the Securities and Exchange Commission (SEC), and Jerome Powell, chairman of the Federal Reserve, discouraged bans on bitcoin. Meanwhile, the growing possibility of Bitcoin ETF approval by the SEC has also fueled the “rumor-buying” narrative.

Related: Bitcoin Analyst ‘Highly Suspicious’ Returns 50K – Will Weekly Close Spark A Correction?

Investors also sought exposure to the bitcoin market as consumer prices continued to rise in the United States, with the Consumer Price Index (CPI) rising 5.4% year-on-year in September for the first time in thirteen years, according to the Department of Labor.

JPMorgan Chase noted in his recent report that high inflation persuaded institutional investors to seek exposure to Bitcoin, with some even seeing cryptocurrency as a better refuge than gold. In another report released in January 2021, the US banking giant expected BTC to reach 140 140,000 in the long run.

“The gold rush as an‘ alternative ’currency refers to the big lies for Bitcoin in the long run,” it noted.

“The consolidation between volatility between bitcoin and gold is unlikely to happen quickly and is a multi-year process in our minds. This suggests that the above $ 146,000 theoretical bitcoin price target should be considered a long-term goal, and thus a stable price target for this year. ”

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