The open interest in Bitcoin futures has almost doubled in the past two weeks, jumping from just under 6,000 open contracts to nearly 10,000. The activity represents an all-time high for Bitcoin futures since their inception.
Tom McClellan, a technical analyst and trader who boasts more than 36,000 Twitter followers, brought attention to the trend in a tweet.
I do not profess to be a bitcoin expert in any sense. But I shared this interesting chart in my Daily Edition this evening. Total open interest in bitcoin futures has nearly doubled in the past 2 weeks. Something interesting is brewing, he tweeted.
Source: @McClellanOsc
Open interest is the total number of futures contracts held by market participants at the end of the trading day. It is used as an indicator to determine market sentiment and the strength behind price trends.
Open interest is calculated by adding all the contracts from opened trades and subtracting the contracts when a trade is closed.
While open interest is not a good predictor of future price changes, it does offer insight into total market activity. When open interest is very low, activity in the market is low as well. Conversely, high open interest indicates market activity—a critical issue for Bitcoin.
Bitcoin options volume at CME rose 1000% this month
Bitcoin’s (BTC) options markets are finally taking off at CME. The combined volume traded over the last ten days surpassed $140 million, as institutional investors delved in call options.
The buyer of a call option can acquire Bitcoin for a fixed price on a predetermined date. For that privilege, this investor pays an upfront premium for the call option seller.
CME Bitcoin Options Volumes – USD. Source: Skew
As halving uncertainties became less of a risk, institutional investors began mounting bullish positions. Despite being more complicated then futures trading, options markets allow investors to leverage their positions without liquidation risk.
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