Here are Three Reasons Why Bitcoin Open Positions Reached Record Levels as BTC Price Rising to $71 Thousand

• Bitcoin futures’ one-day open interest saw the biggest jump in 24 hours since June, rising by over 20,000 BTC.

• Since October 16, US-listed spot ETFs have seen net inflows of $2.7 billion.

Futures tracking Bitcoin {{BTC}} reached a record high open interest (OI) in US dollars on Tuesday, as the asset surpassed $71,000 for the first time since June, data shows.

BTC futures recorded their biggest one-day increase in OI since June 3. As of Tuesday, OI has reached almost 600,000 BTC, or $42.6 billion, having jumped over 20,000 BTC, which is worth $2.5 billion at current prices.

OI refers to the total number of outstanding derivative contracts, such as futures or options, that have not yet been settled. High open interest indicates that there is a significant amount of interest in a particular asset. When open interest increases with rising prices, it indicates that new money is entering the market, which is indicative of a strengthening trend like Tuesday’s.

High open positions can lead to increased volatility, especially when contracts are about to expire. Investors may rush to close, roll over or adjust positions, which can lead to significant price movements. research firm kaiko Despite strong interest from traders in futures, funding rates for such positions remain well below March highs, indicating declining demand, X said in his post.

Funding rates in perpetual futures markets are periodic payments made between investors to ensure that the perpetual contract price remains close to the spot price of the underlying asset. Traders such as Singapore-based QCP Capital remain bullish on BTC in the near term, expecting price gains to continue in the coming weeks.

“With rising expectations for a potential Trump victory that would strengthen both stocks and Bitcoin, we believe BTC is well positioned for medium-term gains,” the firm wrote in a post on Telegram on Tuesday.

Contracts offered on the Chicago Mercantile Exchange (CME) increased by 9% in 24 hours, pushing their open interest to 171,700 BTC worth over $12.22 billion, giving CME a 30% dominance in the futures open interest market. As they maintain their number one position in this market.

In mid-October, Bitcoin was trading around $67,000, according to Glassnode, and OI on CME was at an all-time high in both notional open interest, which is the dollar value of futures contracts ($12.4 billion), and futures contracts in bitcoin (179,930 BTC). reached its levels. data.

Secondly, according to Coinglass data, the funding rate in perpetual markets has also increased to 15% in the last 24 hours; This is one of the highest levels recorded in the last few months, indicating an extreme bias for long-term bullish positions.

The Story Continues

Finally, the third reason can be attributed to strong inflows from US-listed spot ETFs in recent weeks. institutional based trading There are now more bullish long plays at the beginning of the year.

Futures contracts in bitcoin have fallen over 6% since peaking on the CME exchange on October 16; This was in stark contrast to ETF inflows, which saw cumulative net inflows of $2.7 billion. The charge was led by BlackRock’s iShares Bitcoin Trust (IBIT), which recorded net inflows of $2.2 billion during the same period, setting a new asset holding record. 400,000 bitcoins in ETF.

Earlier in the year, it was clear that basis trading or cash and carry arbitrage, which involves taking advantage of the price difference between the Bitcoin spot price and the futures price, was occurring. Fundamental trading involves taking a long position in the ETF and then taking a short position in the CME futures bitcoin price. This was one of the reasons why Bitcoin has traded in a long sideways range since March, as not all inflows from ETFs were directionally long, but overall it was a net neutral strategy.

MatOne analyst also noted the recent divergence between CME OI and ETF inflows.

“There is a difference between us Bitcoin ETF Inflows and CME Open Positions. ETF Inflows are rising meaningfully. CME Open Interest increased, but not by that much. GBTC outflows are also minimal. We are seeing real directional ETF inflows, while cash and carry transactions are less,” Checkmate wrote.

Recent acquisition of Grayscale Bitcoin Mini Trust (BTC) Emory University The endowment may support Checkmate’s outlook as a directional long buy, as a University is not expected to start running the underlying trade. Emory University will be the first endowment to purchase a bitcoin ETF, and while $15 million is not a large sum for an institutional investor, the narrative and directional play stands out, similar to the Wisconsin Pension Fund.

But Bitwise head of research Andre Dragosch takes the other side of this view: He believes underlying trading has already begun due to the increase in net shorting and CME open interest in the last 24 hours. He said in a note to CoinDesk.

“Judging by the change in net non-trade positioning on CME since the beginning of September, there has been an increase in net short positioning. This coincided with an overall increase in CME open interest, implying that there was indeed an increase in cash-and-carry transactions,” he wrote in a note to CoinDesk. “But we only have weekly data through 10/22 .” We received it from the CFTC, so we do not yet have information on the latest OI change.”