December 5, 2021

Open Interest In CME Bitcoin Reaches 8-Month Peak, Surpassing $65K

Tim Drape Expects Bitcoin to Hit $250,000 in 2022

As BTC recaptured its five-month record of $58,550 on BitStamp, open interest in Bitcoin futures markets on the Chicago Mercantile Exchange (CME) climbed to a fresh record level. CME Group’s Bitcoin Futures market has $3.22 billion in active financial derivatives, just $40 million less than its historic highs in February 2021, as per ByBt.com. However, the OI was larger than at the height of the value of Bitcoin in mid-April.

On April 14, when Bitcoin almost touched $65,000, the CME’s Bitcoin Futures OI was $3.02 billion. On October 14, the OI was over 6% greater than mid-April measurements, even while the BTC price fluctuated between $57,000 and $58,550. Traders utilize OI to verify patterns in both futures and spot exchanges. For instance, an increase in existing futures contracts is regarded as fresh money entering the market. Increasing open interest in Bitcoin futures suggests qualified traders aim to expand exposure to BTC.

Awareness Of Bitcoin Futures Grows In Businesses

It appears that corporate capital is joining the Bitcoin market. Due to this increased confidence, traders have been launching new holdings in the $50,000–58,000 price range, with CME volumes increasing upward. Analysts view a surge in OI, activity, and price as evidence of new futures purchasing. That strengthens the underlying asset’s upward tendency.

So far, Bitcoin appears to be following suit. The Commodity Futures Trading Commission’s report on October 5 shows a bullish Bitcoin. Hedgers in the commercial sector have increased their buying of Bitcoin Futures. They now have a fund balance of over 10,000 BTC.

Meanwhile, hedge funds and individual investors are net short of the Bitcoin Futures market. Nonetheless, it may be a ploy to counterbalance long positions elsewhere, like the spot market. This is because CME Bitcoin Futures prices have a greater annualized premium than spot markets. The CME Bitcoin futures price has recently been moving by 15% just above the BTC spot rate, compared to roughly 7.7% in the initial nine months of 2021.

The Macro Dynamics Driving Bitcoin’s Revival

The latest purchasing in the Bitcoin spot price coincided with US officials’ pronouncements. For example, SEC Chairman Gary Gensler and Federal Reserve Chairman Jerome Powell opposed the Bitcoin prohibition. The potential of an SEC-approved Bitcoin ETF has further bolstered the “purchase the buzz” mentality.

Investors wanted access to the Bitcoin market as US consumer prices soared. For the first occasion in 13 years, the Labor Department reports that the Consumer Price Index (CPI) increased 5.4% in September. “September inflation was 5.4 percent, a 13-year high. Bitcoin recently hit $58,000, its highest price since May. Bitcoin remains the world’s finest hedge against inflation.” — Pompliano, 14 October 2021.

It’s been reported that increasing inflation has spurred corporate investors to seek investment in Bitcoin, with a few perceiving it as a superior safe refuge commodity than gold. In a January 2021 research report, the US banking behemoth predicted a long-term BTC price of $140,000. “A decline in gold as an ‘alternate solution’ currency suggests long-term gains for Bitcoin,” it said.

“We believe a confluence in volatility amongst Bitcoin and gold will take several years. This suggests that the hypothetical Bitcoin target price of $146,000 is long-term and consequently unachievable for this year.”