Cryptocurrency : The Open Interest Index of Bitcoin Futures Tailing

A new report from Blockchain analytics company Arcane Research indicates that Bitcoin futures open interest stands at $ 11.3 billion. That is, 59% less than its April 13 peak of $ 27.3 billion.

Indeed, according to the report, downward trading indicates that institutional investors are being cautious at this time.

In this regard, Nathan Cox, Chief Investment Officer at Two Prime said: “I think it’s safe to say that institutional interest has waned. Their ability to invest is limited by recent market volatility. ‘

Importantly, Nathan Cox noted: “As things stabilize, I would expect to see large institutions announce positions, probably accumulated in this setback.”

However, Patrick Heusser, Chief Operating Officer of Crypto Finance AG said: “What this shows is that a lot of retail investors were burned when the market started to go down.”

Furthermore, the Arcane Research report indicates that three-month futures in Bitcoin are in backwardation (future prices below spot). That is, they are traded at a discount to current spot prices. In fact, it is perceived as a bearish signal.

Open interest in Bitcoin futures falls.  Source: Arcane ResearchOpen interest in Bitcoin futures falls.  Source: Arcane ResearchOpen interest in Bitcoin futures falls.  Source: Arcane ResearchOpen interest in Bitcoin futures falls. Source: Arcane Research

The open interest of Bitcoin futures

To better understand, open interest is the total number of contracts that remain open at the end of the trading session.

Therefore, since there is a buyer and a seller in each transaction, the open interest is the total of up or down positions that remain open but not the sum of both.

To this end, open interest in the Chicago Mercantile Exchange (CME) as part of total Bitcoin futures rose at the end of May, but is now trading lower.

Currently, CME’s open interest stands at 12.2% of the Bitcoin futures market. That puts it in fourth place, behind Binance (22.5% of total open interest), OKEx (14%), and Bybit (12.9%).

Sure enough, data from research firm Skew shows that Bitcoin’s futures base turns negative over a three-month period.

Institutional investors are being cautious

To this end, institutional investors know that crypto assets are volatile. Edward Moya, Senior Market Analyst at Oanda said: “Institutional investors mostly held firm. After the dust settled, they still seemed confident with their long-term bets.

Likewise, Chainalysis chief economist Philip Gradwell wrote: “Institutions do not appear to be significant sellers either, although they may be more cautious as buyers at this time.”

Similarly, Matt Hougan, Chief Investment Officer at Bitwise said: “For investors who have not experienced a bear market for cryptocurrencies in the past. This was a great test.

In closing I leave this phrase by George Soros: «It doesn’t matter at all if you are right or not. What does matter is how much you win when you are right and how much you lose when you are wrong.

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