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Bitcoin Future Traders Are Not Bullish Despite Recovery Above $56K

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After an impressive run, Bitcoin fell close to $50K as the cryptocurrency industry saw one of the most damaging corrections this bull season. Despite the fact that the crypto-asset recovered quickly and was trading at $56,859 at the time of writing, derivative traders are not optimistic about its price action.

This was because the funding rate of Bitcoin slid to a 7-month low which, in turn, triggered massive uproar in the market. The figure was in the negative zone, a level last seen in September 2020 when the crypto-asset was priced around $10K.

Revealing the same, Lex Moskovski, the CIO of Moskovski Capital tweeted,

“Wow, it’s been a long time since we’ve seen funding this negative. Fear.”

Twitter

What Does Negative Bitcoin Funding Rate Mean?

Funding rate essentially demonstrates the premium that futures traders have to pay [or receive] to order for them to keep a position open.

A negative funding rate, on the other hand, implied that a majority of investors are shorting or selling, which was further indicative of a rising sentiment of fear in the BTC market. In short, more contracts were found to be betting against Bitcoin’s price rising than contracts betting in favor of it.

On the contrary, a funding rate on the positive in Bitcoin derivatives markets signifies that investors with long positions pay those with short positions. The funding rate spikes have historically coincided with a strong optimism and high leverage from short-term trader.

For instance, the funding rates had previously regained some upward momentum in the last week March similar to the final weeks of January and February.

The market sentiment has flipped rapidly. This was observed from the fact that ahead of the much-awaited Coinbase’s listing on Nasdaq, Bitcoin’s funding rate was neutral at 0.1%-0.15% in larger derivative platforms such as Binance. The world’s largest crypto-asset soared to an ATH as many traders continued to long or buy it Bitcoin, thus overheating the futures market.

Soon after Coinbase went public, Bitcoin noted a double-digit crash from above $60K to a little over $50K which was enough to send panic among investors that use high leverage across major exchanges. The cascading liquidations during this pullback even eclipsed that of the Black Thursday crash of March 12, 2020.

BlackRock Held 37 Bitcoin Futures Contracts From CME

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Following the crypto revolution in 2021, many prolific institutions have embraced Bitcoin. In the latest development, the investments giant and the world’s largest asset manager, BlackRock indicated that it could potentially include BTC futures in its funds in the coming days.

This was revealed in a regulatory filing with the United States Securities and Exchange Commission [SEC], as per which BlackRock held 37 futures contracts from the Chicago Mercantile Exchange [CME] that are worth approximately $360,458 earlier this year.

The latest figures regarding BlackRock’s holdings only represent a mere 0.0014% of the firm’s colossal Global Allocation Fund on reporting day of 31st of January. However, it is still not clear if the asset manager still holds any Bitcoin futures contracts. In addition, the original batch of futures contracts held by the company expired this 26th of March, as per the filing.

Dabbling in Bitcoin

This development comes almost two months after the multi-trillion-dollar asset manager had revealed that it has started to “dabble” in Bitcoin. While speaking about Bitcoin on CNBC, BlackRock’s chief investment officer of global fixed income, Rick Rieder had earlier stated that,

“I wouldn’t put a number on the percentage allocation one should have, depends on what the rest of your portfolio looks like. Today the volatility of it is extraordinary, but listen, people are looking for storehouses of value,” Rieder said on “Squawk Box.” “People are looking for places that could appreciate under the assumption that inflation moves higher and that debts are building”.

As mentioned above, BlackRock registers an astonishing $9 trillion in assets under management[ AUM], and happens to be the biggest investment management company in the world. Tailing behind it are other investment firms such as JPMorgan Chase, Fidelity, Vanguard, UBS, and BNY Mellon. Hence, the news is crucial for the cryptocurrency which has seen significant adoption this bull season.

In January this year, BlackRock had added Bitcoin futures as a potential investment for two of its funds. This was according to the company’s SEC filings. The two funds, in question, are BlackRock Strategic Income Opportunities and BlackRock Global Allocation Fund.

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.

Skew2

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.”

Binance, CME Bitcoin Futures Hits Fresh High As BTC Flirts With $20K

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Bitcoin’s short-lived stint with the $19,348-level has triggered immense volatility not just across the spot market but also in the derivatives space of the cryptocurrency realm. As it geared up for retaking its previously established peak, trading volume figure on one of the world’s leading cryptocurrency exchange, Binance surged substantially.

What’s more, Bitcoin Futures open interest [OI] has also increased to record-setting heights on the platform. The figures climbed to a fresh all-time high of about $1.2 billion as the bullish momentum of the cryptocurrency continued. With this, Binance now holds approximately a quarter of the value of the Bitcoin futures market, which currently stood at $4.1 billion.

Over the past month, Bitcoin futures aggregated trading volume has been higher than its previous months, thanks to the renewed optimism among the market participant prompted by the latest bull run. Notably, Binance’s figures saw tough competition from yet another cryptocurrency exchange and derivatives platform OKEx.

skew btc futures aggregated daily volumes

 

Bitcoin Futures Figures Breaking Record Across Platforms

As Bitcoin flirted with a new high, a more sophisticated product, Chicago Mercantile Exchange [CME] also witnessed its Bitcoin futures figures spike to fresh peaks surpassing high June-July levels. The daily trading volume rose to an ATH of $1.8 billion. The previous high of $1.5 billion was recorded on the 23rd of November during which Bitcoin being traded at $18.3k.

According to the latest Skew charts, CME’s open interest also recorded its highest level at $1.2 billion.

skew cme bitcoin futures total open interest volumes

This comes amid a massive surge of institutional capital inflows to the world’s leading cryptocurrency and its derivatives markets as billionaires and institutional investors were warming to the digital asset. Hence, these trends evidenced that not just retail but also new institutional investors were seeking exposure to Bitcoin.

Several experts have noted that the current rally was catapulted by the increasing investment from not only institutional investors, investment banks but also more importantly payment companies. This included popular giants in the payments realm such as PayPal and Mastercard as they launched crypto offerings for their huge userbase this year.

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.

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%.

skew bakkt bitcoin futures total open interest volumes 1

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?

Bitcoin: BTC is Above $11.5k But Will it Drop Down to $9.6k to Fill CME Gap?

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Bitcoin has been moving in just one direction since 21 July, that’s up. The rally, which appears literally vertical on the 1-day chart, has been relentless. Bitcoin is up by 26.15 percent over the past 10 days and the asset went on to register its new yearly high at $11,700 over the past few hours.

However, with every Bitcoin rally, the common question that arises is what will cause Bitcoin to drop now after witnessing such a rapid rise. On Twitter, the following narrative is starting to gain traction.

What is this Bitcoin CME Gap?

Now, between 24th July and 27th July, Bitcoin’s valuation on CME futures skipped a range when the prices started trading at $9915 on 27th July, from $9600 on the 24th of July. Now this CME gap is nothing but the exchange closing down on the weekends for trading. As an asset, Bitcoin is traded 24×7 on other spot exchanges but on CME futures, the exchange is non-operational on Saturday and Sunday.

Hence, the trading on CME would begin on the spot prices evident on Monday morning and not on the valuation it ended on during Friday evening. Hence, from time to time these gaps take place and according to certain traders and analysts, Bitcoin’s movement over time tends to fill on these gaps. In order to under the paradigm better, we analyze some of the CME gaps since 2018.

CME Gaps; How has Bitcoin responded?

Bitcoin gaps e1596292894342

As illustrated in the above, Bitcoin CME gaps over the past 2 and a half years have occurred only a few times. Even though CME closes trading on every weekend, it is definitely not a regular occurrence.

Now after analysis, It can be observed that certain gaps have been filled by Bitcoin’s movement over the years. The gap formed on May 7th, 2019 was filled during the rally in April this year.

Whereas, a minor gap was formed on 14th August 2019 and it was recently filled by Bitcoin recently between 29th and 30th July. As mentioned earlier, a certain group of traders was varying about the gap left at $9600 on 24th July, and they believed that there is a chance Bitcoin may fill this gap up over the next few days.

So Bitcoin filling CME gap; is it 100% accurate?

Frankly, no there is no confirmation to whether Bitcoin absolutely fills these gaps whenever they take place. Coincidently, the asset has been filling them lately but that doesn’t mean it happens every time. For example, there is still a gap that formed during early 2018(check chart) at $3700, that hasn’t bee filled over the past years.

If Bitcoin did fill all the CME gaps, the asset should take care of this one as well but it is unlikely to happen. For Bitcoin’s spot prices to nose-dived till $3700, something major has to go wrong with the digital asset industry.

Hence, a correction down to $9600 is definitely possible, but it will not be because of the CME gap left behind, hence do not bet on it.

Ethereum Price Surge Drives Ethereum futures Open Interest to a Record High

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For the first time in history, the gross figure of the open Ethereum’s futures contract eclipsed $1 billion, another sign of surging open interest in the second-largest cryptocurrency. The total value of all open bets in the value of Ethereum hit a new all-time high, as per data by blockchain analytics firm, Skew.

Ethereum futures

The new record comes as ETH ‘s price broke past the $300 price level and the imminent launch of Ethereum 2.0, which has boosted long-term investor trust in the potential of cryptocurrency. Future contracts refer to the consent of two participants to buy or sell a particular asset at a set price at a predetermined time in the future.

The buyers of the Ethereum futures contract anticipate the value of ETH will be different from the value of the contract before it is deployed, allowing for immediate proceeds upon completion of the commitment. Notably, the entities issuing futures contracts earn a fee referred to as premium, with the anticipation that the fee will be higher than the loss

Total Ethereum futures open interest surge by 30 percent

Total open interest in Ethereum futures surged by nearly 30 percent from June 20, from below $800 million to about $1.2 billion during press-time. Open interest is a very significant metric because it shows the fresh amount both issuers and traders have gambled in futures contracts before the expiry of the contract in the future.

Moreover, major crypto exchange OKEx is currently leading the pack with the most extensive Ethereum futures open interest of over $290 million. Crypto exchanges Huobi and BitMEX follow behind with $220 and $216 total open interest, respectively. In particular, Huobi recently revealed its plan to roll out Ethereum options trading later during Q3.

Ethereum leading the new market charge

Ethereum futures were surging earlier in the year, reaching almost $900 million before the coronavirus pandemic fears increased, and the further collapse of the U.S stocks market brought down the cryptocurrency market with it. The open interest in Ethereum futures crashed to below $400 by mid-March. However, the gross value of Ethereum futures open interest has been on a determined surge upwards since then.

The current momentum has been driven by the recent increase in the price of Ethereum. Nevertheless, the surging Eher future has more work to do if they match the king of the cryptocurrency futures contract, Bitcoin. Back on July 21, the open interest in bitcoin futures eclipsed the $4 billion mark. However, BTC futures contracts have raised at half the rate seen by Ethereum futures since the price began surging.

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

skew btcusd iv vs rv

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.

Brazil’s Regulator Orders Binance to Stop Providing Crypto Derivatives

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Brazil ‘s financial regulator, the Securities and Exchange Commission, which is commonly known as CVM, has prohibited Binance ‘s giant trading platform from offering cryptocurrency derivatives in the country. According to the authority, derivatives are cryptos or underlying assets, which are considered to be securities.

As such, Binance is required to register with CVM in order to secure an operating license to offer crypto derivatives. The Binance Exchange Platform does not, however, hold such a license to operate as a securities intermediary in Brazil. Indeed, the regulator’s notice points to the growing interest of the investor in cryptocurrency derivatives.

Growing investor interest in the crypto derivatives market

Crypto derivatives allow investors to bet on the market value of cryptos without the need for an actual token. Caution also follows a period when the majority of vital cryptocurrency spots begin to focus on public crypto derivatives offerings on the market, such as BitMEX. For instance, Binance launched a trading margin functionality.

Crypto derivatives offered by Binance aim to form a market that imitates the traditional markets sub-structure. Binance primarily focuses on integrated investment products to drive cryptocurrency adoption in the form of crypto derivatives. As of now, Binance is yet to respond to the ban. Furthermore, the ban will directly impact traders who deal with crypto derivatives in Brazil. The order by CVM reads: 

“It remains evident that the company Binance Futures, through the webpage ‘www.binance.com,’ captures customers residing in Brazil with a public offering of derivative intermediation services…; the aforementioned company does not hold authorization from this Securities and Exchange Commission to act as a securities intermediary.” 

Brazilians not missing cryptocurrency trend

Brazil has off late been a hive of crypto activities in recent years. Brazilians are yet to miss crypto-related trends in the nation. Indeed, in the LATAM region Brazil was the top country in terms of both policing and innovation. In conclusion, Brazil’s journey towards crypto oversight took an additional step in 2019 after the lawmakers formed a commission to contemplate the subject.