The CME Bitcoin futures market has surpassed Binance Futures to become the second largest Bitcoin futures exchange (BTC) with the largest open interest. The data show that institutional size is rapidly gaining an increasing share of the cryptocurrency market.
On October 10, Skew reported that open interest in the CME Bitcoin futures market rose sharply by 1,500 contracts. Since then, in three days, the BTC price has risen by 9% and exceeded $ 13,000.
The increased open interest in CME BTC futures is likely to have a positive impact on the price of BTC, especially as recent research has shown that “CME Bitcoin futures are more favorable for price discovery in the relevant spot markets”.
Bitcoin open interest. Source: Skew
Obvious growth in institutional demand for bitcoin over a short period
For many years, the bitcoin futures market has been dominated by two major players: BitMEX and OKEx. Last year, the next generation of futures exchanges began to expand rapidly, leading Binance Futures, Bybit and Huobi to compete with the likes of BitMEX.
On December 17, 2017, the Chicago Mercantile Exchange launched bitcoin futures contracts. It has grown to become the second-largest open-exchange bitcoin futures exchange in three years, according to Skew reports.
The term “open interest rate” refers to the value of all actively open long and short futures contracts. It is used to measure market activity by measuring how much capital is invested in the futures market.
Skewed data shows that CME now amounts to 790 million dollars in long and short BTC contracts. That is only $ 19 million less than OKEx, which was the dominant futures exchange through 2020.
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The rapid increase in open interest in the CME Bitcoin futures market reflects growing institutional demand for three main reasons.
First, the total size of the bitcoin futures market has grown significantly over the last three days. Therefore, the open interest in CME increased more than other retail-focused platforms, which also saw a significant volume spike.
Second, large institutional markets, including the Grayscale Bitcoin Trust (GBTC), reported significant increases in institutional flows. Cointelegraph reports that at Grayscale, Net Assets Under Management (AUM) increased $ 300 million in one day, although the increase in the BTC price mostly drove the increase in assets under management.
Third, the options market also broke record daily volumes, which are also preferred by full-time traders and high-income investors.
Will the institutional madness continue?
Prominent investors such as Chamat Palihapitiya, CEO of Social Capital, believe that more banks and institutions will soon support Bitcoin. He said:
“Following the PayPal news, every major bank is holding a meeting on how to support Bitcoin. This is no longer necessary. ”
According to billionaire Paul Tudor Jones, a Wall Street investor, organizations primarily see bitcoin as a long-term trade in inflation and distribution. However, technical analysts say the short- to medium-term outlook for BTC / USD remains favorable.
Bitcoin has seen its highest daily close since January 15, 2018, which means that the BTC price is on the verge of breaking across all time frames.
Daily Bitcoin chart. Source: TradingView.com
As reported by Cointelegraph, traders have confirmed the potential for increasing Bitcoin records on weekly and monthly charts. If the BTC stays above $ 13,000 at the end of the week and remains above $ 12,500 for the rest of the month, it may indicate a convincing technical breach.
Macrofusion, as well as a favorable technical structure, can increase the fuel demand for bitcoin as organizations increasingly begin to accept the world’s largest digital currency.