Even when BTC was $ 65,000, it had never looked like this!

Bitcoin (BTC) futures open interest on the Chicago Mercantile Exchange (CME) has soared to a new high with a five-month high of $ 58,550 on BitStamp.

According to data provided by ByBt.com, the total number of derivative contracts in force on the CME Group’s Bitcoin futures market has reached $ 3.22 billion. Only $ 40 million below the record level recorded in February 2021. On the other hand, even when the price of Bitcoin broke a record in mid-April, the amount of open interest was not that high.

Open interest for Bitcoin futures on the CME was $ 3.02 billion on April 14, when the price of BTC reached almost $ 65,000. However, today, the price of BTC was moving between $ 57,000 and $ 58,550, while the open interest was 6 percent higher than the data in mid-April.

Open interest for CME Bitcoin futures. Source: ByBt.com

Traders often use open interest as an indicator to confirm trends in both derivatives and cash markets. For example, an increasing number of pending derivative contracts are interpreted as new money entering the market regardless of bias.

In particular, the growing open interest in the futures market seems to be an indication that accredited investors want to increase their investments in BTC.

Institutional Investor Increases Risk of Bitcoin Futures

The current open interest data shows that more institutional capital is entering the Bitcoin market. As a result, traders appear to be more confident to open new positions in the $ 50,000 to $ 58,000 price range, and CME volumes have shown an upward trend in the last seven days.

Volume and open interest of Bitcoin futures. Source: CME

Analysts observe a uniform increase in open interest in volume and price as new buying signals in the futures market. This also puts the underlying asset in a better position to continue the uptrend. It seems that Bitcoin is in a similar uptrend.

The most fundamental data pointing to Bitcoin’s price surge comes from the Commodity Futures Trading Commission statement released on October 4. The announcement that the commercial sector, made up of institutional hedge fund managers, is accelerating their purchases of Bitcoin Futures and that they have a net position of more than 10,000 BTC, influences in this regard.

Risk changes for CME BTC futures. Source: CFTC, Forbes

However, hedge funds and individual investors are creating a net deficit in the Bitcoin futures market. However, this can be a tactic to balance long positions in different areas, such as the spot market.

This is mainly due to the higher annual premium available in CME Bitcoin futures prices in the spot markets. In recent days, the CME Bitcoin futures price has been trading 15 percent above BTC’s current spot price, compared to an average of 7.7 percent in the first nine months of 2021.

Bitcoin Futures Premium vs. Spot Prices. Source: Skew

Big Data Behind Bitcoin Price Recovery

The surge in purchases on the Bitcoin spot market came after statements from its US regulators.

For example, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), and Jerome Powell, chairman of the Fed, are against the Bitcoin ban. Meanwhile, the possibility of further approval of Bitcoin ETFs by the SEC is also interpreted as a “buyout of the rumor.”

Related: Will Bitcoin Return to $ 50,000? What are the analysts saying?

Investors are also trying to take risks in the Bitcoin market as consumer prices continue to rise in the US The Consumer Price Index (CPI) rose to 5.4 percent year-on-year in September for the first time. in thirteen years, according to the Department of Labor.

A recent report by JP Morgan Chase claims that high inflation is driving institutional investors to take risks with Bitcoin, with some even seeing the cryptocurrency as a better safe haven than gold. In another report published in January 2021, the American banking giant said that it expects the price of BTC to reach $ 140,000 in the long term.

“The fact that gold as an alternative currency is out of the equation means a huge advantage for Bitcoin in the long run,” he said.

“Convergence in price volatility between bitcoin and gold is unlikely to occur rapidly. This is a multi-year process. This reveals Bitcoin’s long-term theoretical target price above $ 146,000. $ 146,000 will be a target. unsustainable at the end of this year. “

Opinions and comments expressed here are solely those of the author. It may not reflect the views of Cointelegraph. All investment and trading involves risk. You should do your own research when making a decision.

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