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Bitcoin Futures Open Interest Skyrockets To $13B; CME Tops Chart

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Bitcoin continued to break new records as it oscillated back and forth a little below $40k. Following the price recovery in the spot market, optimism was also noted across the derivatives sector.

According to the latest stats compiled by Skew Analytics’ data dashboard, aggregated open interest [OI] in Bitcoin futures across the 12 biggest cryptocurrency exchanges surpassed a whopping $13 billion.

With this, OI hit a fresh ATH yet again on the 14th of January as interest in the market continued to soar high.

CME Tops The Chart For Bitcoin Futures OI

Skew

Out of the total OI figure, CME Group’s bitcoin futures accounted for $2.39 billion as the platform continued to soar in popularity as more institutional investors flock to the sector.

CME was followed by OKEx with $2.08 billion, Binance with $2.05, and Huobi with $1.04 billion. The once leading derivatives giant BitMEX was in the 8th position on the Skew charts amassing an OI of $0.88 billion.

Unlike CME which went on to become the largest market for Bitcoin Futures, ICE’s crypto venture, Bakkt has been laying low in terms of the OI numbers recording a mere $0.05 billion on the same day.

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The latest news comes after a large liquidation event following the biggest price dump of the year. Despite more than $1 billion buy liquidation, the appetite of the futures contract trades appeared to be bullish as depicted by the OI figures. It was clear that the impact of the recent liquidations was in no match for the bullish outlook among the market participants.

Optimism From Professional Traders: Strong Bullish Projection For Bitcoin

The above charts also evidenced more and more inflow of money into the market, as traders expect a near-term rise in the crypto-asset’s volatility which was indeed a positive development for its spot price. Noting the rising optimism, prominent analyst Joseph Young tweeted,

“Bitcoin futures open interest is back to an all-time high once again. Open interest = the sum of all futures contracts in the market. When the market crowded, massive price swings like the Jan. 12 20% drop become more likely. Another flush drop above $42k could happen again.”

Bakkt Reportedly Intends To Go Public With $2 Billion Merger

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Back in 2019, the Intercontinental Exchange [ICE] rolled out Bitcoin derivative services that included futures and options through Bakkt. The cryptocurrency exchange saw immense traction back in the day and is reportedly prepping to go public.

Bakkt To Team Up With VPC Impact Acquisition Holdings

Over the course of the last two years, Bakkt made it to the headlines for various reasons. Starting with the launch of its Bitcoin futures platform all the way to Mike Blandina, the CEO of the firm bidding adieu to the crypto platform for JPMorgan, the platform is back in the headlines as rumors of the firm going public surfaced in the industry.

The platform has managed to stay relevant and its application is substantial proof of the same. Bakkt’s app allows users to keep their virtual assets in check while receiving loyal points as well as gift cards.

Bloomberg, in a recent report, revealed that Bakkt was in “advanced talks” with VPC Impact Acquisition Holdings, a black check firm. As told by an anonymous source, the crypto platform will reportedly engage in a merger with the aforementioned company in order to go public. The sources familiar with the matter further affirmed that an announcement about the same would be made as early as next week. The value of the transaction of both these platforms could sum up to a whopping $2 billion.

Furthermore, ICE’s crypto venture is signing the merger deal with VPC, a company intimately associated with Victory Park Capital which acquired the former under SPAC aka special purpose acquisition company. While the crypto exchange hasn’t affirmed its intention of going public, yet, the rumors about the same continue to prevail.

Additionally, Kelly Loeffler, the former CEO of Bakkt was seen resigning from the Georgia Senate re-election bid. Loeffler took to Twitter to congratulate Reverend Raphael Warnock while apologizing to those who supported her campaign. The tweet read,

She said,

“Unfortunately, we came up slightly short in the runoff election, and earlier today I called Reverend Warnock to congratulate him and wish him well in serving this great state.”

Bakkt Bitcoin Futures Records 36% Increase In Daily Volume Since Previous ATH

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Bitcoin Futures, have managed to amass immense traction across the globe. While several platforms have begun exploring the prospects of Bitcoin Futures, the existing ones continue to score big. Prominent crypto asset custody platform, Bakkt recently revealed that it had quashed its own record for Bitcoin Futures Trading Volume.

Still Behind CME

Intercontinental Exchange’s [ICE] crypto derivatives platform, Bakkt, revealed on Twitter that it had recorded a new high in Bitcoin Futures volume. The platform nearly accumulated a total volume of $200 million surpassing its previous record by 36%. The tweet read,

“Another record day in the books for our physically delivered futures:

15,955 Bakkt Bitcoin Futures were traded today, representing over $200M of volume and a 36% increase from our previous all-time high”

Bakkt’s previous all-time high was about $125 million, where a total of 11,706 Bitcoin Futures were traded on 28 July 2020.

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Back when ICE announced the launch of Bakkt, challenging the already well established Chicago Mercantile Exchange [CME], the fervor around the project left the crypto community with high expectations for the project. Even though investors considered Bakkt as a catalyst for Bitcoin’s potential bull runs, the platform did not spiral as expected. Bakkt witnessed dainty gains compared to other projects. The latest instance substantial proof of the same.

Today, as Bakkt recorded its latest all-time high of $200 million in volume, CME went on to bag $262 million in volume. The highest Bitcoin Futures volume, CME has recorded was about $1.1 billion. The disparity between these two platforms questions the “competitor” tag that they have been given.

CME wasn’t the only platform that overtook Bakkt, prominent cryptocurrency exchanges like Binance, Huobi as well as OKEx were seen recording increased value. Malta-based Binance recorded trade worth, $2.65 billion over the last 24-hours for BTC-USD perpetual contracts. Huobi garnered a total of $1.28 billion via its BTC/USD perpetual contract.

Crypto Derivatives Volume Soar to Fresh ATH in August; Catalyzed by Bitcoin’s Rally Above $12,000

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While the lack of positive jurisdiction may have driven the cryptocurrency industry into a gray area, but the derivatives sector has come to the rescue. It has undoubtedly driven a new cycle of crypto adoption.

The crypto industry has seen developments on various fronts and thanks to the foray of many institutional investors, space has matured significantly from narratives such as ‘Wild West’ or another ‘dot-com bubble’.

Over the past few years, crypto derivatives have played an important role and this was evident in its soaring trading volumes. According to the latest Exchange Review report by CryptoCompare, derivatives volume has soared to a fresh all-time high in August.

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Trading volumes of derivatives surged by a staggering 53.6% in August driving the figures to a massive $711.7 billion. With this, the trading volume surpassed the previous high of May when it registered $602 billion in monthly volumes.

Along with the derivatives, volumes for spot also increased by 49.6% taking its figures to $944.9 billion in August. Interestingly, this month saw a period of high volatility coupled with Bitcoin’s price movement climbing to the 2020-peak above $12,300. This could have potentially triggered the surge of trading volume as trading activity in derivatives as well as their underlying cryptocurrencies intensified.

This was a promising sign of the market maturing as institutional investors remained overall optimistic despite several pullbacks.

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Besides, derivatives exchanges also saw a significant increase in trading volume in August, according to the report. Huobi dominated the chart with a trading volume of $208.5 billion after rose by 44.7%.

Next in the line was OKEx, which was up by 69.1% and reported a volume of $190.8 billion following Binance with $184.6 billion volume traded after surging by 74% in August. In addition, BitMEX traded $72.5 billion and registered an increase of 43.6%.

The report further noted,

“Trading activity remained high in August compared to July. The top 4 exchanges Huobi, OKEx, Binance and BitMEX represented 90% of the volume traded throughout the month.”

Monthly CME futures contract volumes have also noted a substantial uptick of 36.3% since July as it touched 203,867 contracts traded in August. Additionally, another institutional investing platform, Bakkt recently surpassed its highest-ever figure of $147 million in volume with 12,791 contracts traded on 25th August as previously reported by TWJ.

Bakkt Volume Smashes Previous Record, Hits New ATH at $147 Million

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Almost a month after breaking its record twice in two consecutive days, volumes on Bitcoin futures offered by Intercontinental Exchange [ICE] subsidiary, Bakkt, hit yet another milestone.

The institutional investing platform registered its highest-ever figure of $147 million in volume with 12,791 contracts traded on 25th August, as per the data from the crypto-analytic site, Skew. As compared to its previous high in July for Bitcoin’s monthly futures, Bakkt’s figures were up by 15%.

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On the other hand, the open interest [OI], which is an indicator of the total number of outstanding contracts held by investors, declined and was found to be at $9.5 million. This may be due to the fact that the latest move followed a correction in the underlying asset price that plunged to $11,397 as opposed to its previous high, which was driven by Bitcoin breaking the almost three-month range-bound trading channel.

Bakkt’s physically-settled contracts which are paid out in BTC registered a volume of $134 million while its cash-settled contracts, which are delivered in US Dollars, accounted for $13 million.

However, New York Stock Exchange-owned Bakkt wasn’t the only institutional exchange that recorded a new peak. Its rival, Chicago Mercantile Exchange [CME] also saw nearly a month-high surging to a volume of $935 million while its open interest was found to be at $713 million, according to data from Skew Analytics.

skew cme bitcoin futures total open interest volumes

Leading cryptocurrency exchange and derivative platform, OKEx‘s ‘BTC Top trader sentiment index’ also spiked to 0.59 as volumes rose to $4.5 billion despite a low open interest. However, these figures were still negligible when compared in a macro aspect of the derivatives market.

The aggregated daily volume of the collective derivatives platform, as noted by Skew, suffered from poor figures in August. It continued to remain below $20 billion for the most part of the month since the underlying asset’s price sustained major corrections and failed to breach $12,000 despite multiple breakout attempts.

However, with the latest surge, the aggregated daily volume also rose, though not significantly, to $17 billion, a level that was last seen on 19th August when Bitcoin’s price soared to $12,278. Could this spur a rally for Bitcoin in the near-term?

Over $4.3 Billion in Bitcoin, Ethereum Options Was Clocked in July 2020

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The last 7 days in July was extremely positive for the price values of Bitcoin and Ethereum, as both virtual currencies improved by 23 and 45 per cent respectively. Ethereum has moved above $400 to its highest point in 2020 and the overall improvement in the ecosystem has had an impact on Deribit’s options market.

Deribit released its Institutional Newsletter recently and the derivatives exchange expressed that July was one of the best months in 2020 from an options volume.

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According to the newsletter, the total options volume resulted during the previous month eclipsed everything in the past, as the total turnover clocked in at a whopping $4.3 billion. It was a massive 52 percent jumped from June 2020 for Deribit.

Official numbers indicated that 380,804 BTC options contracts were traded, rising by 44% versus June 2020 and for Ethereum options, the number clocked in was around 1,878,361 contracts; spiking by 41% since June 2020.

The report further added,

“The total Options OI on Deribit was up 37% vs. June, with an impressive 90% growth in ETH. However, BTC growth did not slow down either, increasing by 31% vs. Q2 expiry. Altogether a new Options OI record was reached with more than USD 2.01 billion worth of contracts open right before the expiry.”

In terms of total turnover from USD development, over $10.7 billion in July was witnessed jumping by 17% from June 2020.

The relative improvement of the derivatives market is a prime example of the improving interest in the crypto market. Traditional traders and accredited investors were getting drawn towards investment products involving Bitcoin and Ethereum, in order to gain substantial exposure.

However, Bakkt’s Bitcoin exchange did not have the same fruitful experience in July 2020.

Bakkt Bitcoin Contracts dropped from 221 to 58

According to a recent Arcane Research tweet, the number of Bakkt Bitcoin futures contracts that were held in July crashed about 75% in July, which was the lowest amount recorded throughout 2020.

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The above chart illustrated that the number of Bakkt bitcoin delivery contracts declined from 221 in June to a lowly 58 in July. June was extremely positive for Bakkt hence this comes across as a major setback for the ICE backed exchange.

bakkt bitcoin futures

However, in spite of misfortunes the previous month, It is evident from Skew data that Bakkt’s Open-Interest is currently at an all-time high range of $25 million, which suggested that institutional investors were continuing to flood in the regulated exchange.

Bitcoin Bakkt Futures Settles 11,706 BTC; CME Reaches an OI of $726 million

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The domino effect in play for Bitcoin seems to be in full throttle.

After bitcoin surpassed its yearly high in February, the largest digital asset created a ripple effect in multiple directions. With on-chain fundamentals improving in the charts, Bitcoin’s derivatives market was incurring major change as well.

CME and Bakkt have been two of the most important exchanges for Bitcoin that have promoted the involvement of institutional investors in the digital asset space.

Many believed that Bitcoin’s next major bullish rally would emerge from the participation of accredited investors, and according to recent developments, things are likely to move in that direction at the moment.

skew bakkt bitcoin futures total open interest volumes

According to Skew analysis, Bakkt futures reportedly recorded its highest BTC physically-settled contracts, amassing a whopping 11,705 futures on 29th July. The futures contracts were valued at over $125 million. The platform that is backed by Intercontinental Exchange, announced on Twitter,

Now alongside Bakkt, CME was registering a heightened level of activity on its platform as well.

According to data, the Open-Interest in CME cash-settled Bitcoin futures surpassed its previous all-time high with a massive surge of up to $724 million.

skew cme bitcoin futures total open interest volumes

At illustrated in the above chart, the OI on the CME platform witnessed a huge spike over the past 48-hours which led to the exchange passing its previous high of  $530 million.

CME’s high open-interest is currently accompanied by an average daily volume of $308 million as compared to $285 million witnessed in the month of June. Although, the daily volume had spiked up to $1.7 billion in the charts during the Open-Interest rally.

Implied Volatility spikes after consistent lows

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One of the surprising trends consistent throughout the year has been Bitcoin’s volatility. Despite a high level of activity in February, April-May, and now in July, volatility has been under the radar. Bitcoin’s volatility has been so low that other traditional stocks appeared to be more volatile in nature than Bitcoin.

However, the recent spike is creating a bit of a change. Bitcoin’s Implied and Realized Volatility, both underwent a minor spike during the recent rally. Both the volatility levels had recently registered their yearly-low at 3.1% and 3.0% respectively, so it will probably take a while before it reaches previous high levels.

Low volatility levels are a positive sign from a long-term perspective as they indicate the maturity of an asset.

New Institutional Bitcoin Product on the Horizon as Bakkt Partners with Galaxy Digital

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Digital asset custody and derivatives solutions provider Bakkt has partnered with digital asset manager Galaxy Digital to develop a new institutional bitcoin product. The new partnership will see Bakkt ‘s custodial services offered alongside the Galaxy Digital Trading (GDT) engine match and trading platform.

As per Bloomberg ‘s interview with John Conneely, head of Bakkt ‘s custody, the new collaboration was inspired by the growing institutional demand for bitcoin exposure. Moreover, Galaxy Digital will seek liquidity from more than 30 market markers and will be able to trade on its GDT platform 24 hours a day.  According to the Head of Sales at Galaxy Digital Trading, Tim Plakas:

“Asset managers and hedge funds considering this service can be assured by the high standards we hold as a publicly-traded company with audited, public financial statements and an institutional-sized balance sheet.”

New institutional bitcoin product will ease the growing institutional demand for BTC

Bakkt has been offering regulated bitcoin futures to clients since October of last year. Bakkt also offers institutional-standard custodial solutions for the secure storage of bitcoins dubbed Bakkt Warehouse.

On the other hand, Galaxy Digital, which is owned by Bitcoin enthusiast Mike Novogratz, offers a wide range of cryptocurrency financial solutions. The partnership between the two firms will see the best-in-class services offered by the two institutions come together to ease the growing demand for bitcoin exposure by major institutions.

 

 

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Furthermore, Bakkt combines both cold and warm storage services to preserve crypto assets. The majority of the funds are stored offline, which guarantees more security from hackers than online storage. Notably, the crypto assets stored in Bakkt Warehouse are protected by a massive $125 million insurance policy, with clients able to buy over $500 million in extra protection.

The derivatives platform is also working on other significant projects, such as the development of a retail-oriented cryptocurrency mobile app. Some recently disclosed details of the mobile app show it has incorporated some other third-party crypto wallets and features.

 

Bakkt’s $500 million BTC insurance indicates the improving plot of Institutional Investors

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Bakkt Warehouse launched its deposits and withdrawals for Bitcoin back on September 6th, 2019 and it has come a long way since then.

According to a recent blog post by Adam White, CEO of Bakkt, the cryptocurrency platform that is owned by Intercontinental Exchange (ICE), indicated they had secured its custody business in Bitcoin with an additional $500 million insurance policy.

The post added that the exchange is trying to make the asset accessible to more institutional investors and they have currently added 70 more clients to the Bakkt Warehouse. The post added,

“Beyond the $125M of insurance already in place at the Bakkt Warehouse, customers can now purchase more than $500M in additional insurance coverage, subject to underwriting criteria.”

In order to strengthen their rapport with the institutional customers, the exchange has also completed a SOC 1 Type I examination by KPMG and a SOC 2 Type II examination of the ICE infrastructure and enterprises. Bakkt aims to let its consumers and institutions to buy, sell, store, and spend digital assets, by connecting existing market and merchant infrastructure to the blockchain.

Additionally, the blog post also revealed a potential partnership between Bakkt and two of the largest financial institutions but the firms remained unidentified in the report.

Bakkt’s popularity has increased in 2020

skew bakkt bitcoin futures total open interest volumes

From the chart above, it can be identified that the total Open Interest on Bakkt Bitcoin Futures peaked at a relatively lower level of $7.0 million and the average stood somewhere below $3.5 million in 2019. However, the interest has significantly picked up in 2020 as an all-time-high Open-Interest of $19 million was witnessed on February 19th. The average has also been high and improvement in terms of interest and customer engagement is definitely higher than the past year.

The recent announcement will only add to the current improving plot for Bakkt, as institutional capital continues to be soar in the Bitcoin industry.

Bakkt to launch BTC Crypto Mobile App

In mid-march, the exchange had also announced that they were planning to integrate the involvement of their retail investors through a Bakkt mobile application. According to White, the app would enable its users to aggregate their assets into a signal digital wallet and the application may possibly be available by the summer of 2020. His enthusiasm was highlighted in this statement,

“I’m excited at our potential to unlock nearly $1 trillion of digital assets when the Bakkt app launches this summer.”

Bitcoin’s Accredited Investors Continue to Remain Active as CME Incur Higher Premium Than Retail Platforms

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March 2020 would be a month to forget for the global financial industry. With the traditional markets registering some of their worst declines since the late 1980s, major stocks such as Dow Jones and S&P 500 were still trying to recover some of their losses.

The digital asset industry has been the same as Bitcoin lost over 38 percent of its valuation on 13th March. However, the crypto markets have witnessed a faster recovery rate in comparison to traditional stocks and Bitcoins’ derivatives market is one of the prime examples.

Now, According to a recent Arcane Research, it was observed that Bitcoin Futures over the past week have started trading at positive premiums again. It was a major improvement in terms of market sentiment as, during the 3rd week of March, the premium on both institutional and retail exchanges were exhibiting a negative rate.

There was another key difference response observed in the charts.

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The reports suggested that at the time of writing, CME BTC futures contracts were trading at a higher annualized premium of 7.39 percent whereas the collective retail exchanges such as BitMEX, Deribit only registered a lowly premium of 0.19 percent.

The above data is crucial because it highlighted the fact that institutional investors were more bullish in the market than retail but the scenario was completely divergent during the early-year bullish run.

During January-February 2020, the retail exchanges had an upper hand in terms of higher premium rates and many speculated that these exchanges were majorly responsible for Bitcoins’ early year rally.

In spite of CME’s current positive outlook, it is not surprising that institutional exchanges were doing better than retail platforms.

During the crash on 13th March, the open-interest and 24-hour trading volume on BitMEX, OKEx, Huobi, and Deribit exhibited a massive drop with pushed the entire market towards a panic sell-off. The number of put sales order went above the usual margin as people contemplated the prices to fall further.

However, a similar sentiment did not precipitate on the institutional end.

Although a drop in OI was observed on CME as well, the drop in these institutional exchanges was not as dramatic in comparison to retail.

Bakkt’s BTC futures contracts accommodated a similar situation as after a minor dip in trading volume after the crash, the total trading volume jumped backed to normal levels over the same week.

Hence, it can be implied that licensed investors on Bitcoin were keeping their fate on the future of Bitcoin’s valuation and were unnerved after the collapse in March.

Backwardation may lead to another pullback?

However, in spite of the positive sentiment on CME and Bakkt, a phase of backwardation was currently evident in Bitcoin’s market which suggested that many expected Bitcoin’s price to fall further in the charts. Therefore, a lot of people were holding off their investment and waiting for the current prices to drop below the spot prices.

Such a scenario may have major implications in the future since any move upwards with low Bitcoin trading volume with lead to the formation of a weak bottom.

Bitcoin would be highly vulnerable to another pullback. Therefore, a breakaway from backwardation is still crucial for a possible bull run ahead.