2020-5-21 21:00 |
Open interest for Bitcoin futures on the CME is once again pushing higher towards fresh all-time highs This growth has not coincided with any heavy increase in trading volume, signaling that many investors are looking to use futures to gain long-term exposure to BTC BTC OI’s growth has come as one of the Fed presidents notes that the COVID-19 pandemic could drag on for significantly longer, also leading governments across the world to spend significantly more money combating it Bitcoin’s bout of consolidation just below $10,000 has not led investors to lose their interest in the cryptocurrency. This is true amongst retail investors, but data regarding investor activities on the CME also indicate that it applies to institutional investors as well. Rising open interest (OI) on the platform suggests that institutions, professional traders, and leveraged funds – all the typical users of the CME – are actively moving to gain mid or long-term exposure to the benchmark digital asset. This comes as one Fed president notes that the economy won’t see any sustainable recovery until the ongoing public health crises is concluded. This means that governments and central banks across the world may continue printing significant amounts of fiat currency in order to fund anti-Coronavirus initiatives. Bitcoin Sees Rising Open Interest on the CME; Here’s What This Means Bitcoin has been caught within a firm bout of sideways trading throughout the past several days and weeks, struggling to garner enough momentum to surmount the $10,000 resistance level. Investors – and especially institutional ones – are still keen on gaining exposure to BTC, a trend that is elucidated while looking towards the cryptocurrency’s OI on the CME. As seen while looking towards the chart below, aggregated open interest for Bitcoin on the CME has climbed to nearly $550 million. Image Courtesy of Unfolded In late-March, OI on the platform was sitting at beneath $150 million. This was shortly after the cryptocurrency experienced its meltdown that led it to decline from over $8,000 to lows of $3,800. Growing Fears of a Prolonged Economic Crises Boost Bitcoin The trend of institutional investors moving to gain exposure to Bitcoin is likely due to its “safe haven” properties and positive performance in recent times. Safe haven assets are increasingly becoming hot commodities, as it appears that the ongoing health crises could drag on for quite some time, costing even more money. Boston Fed President Eric Rosengren spoke about this in an interview with MarketWatch, noting that a failure to fully addresses the problems created by the pandemic could have lasting effects on economic growth. “If we don’t get the public health right, there’s a limit to how much we’re going to be able to do to solve that problem,” he said. He further added that it is critical that the Fed eventually pays down some of the debt that has been incurred as a result of their recent spending. This boosts the case for Bitcoin, as its current price trend suggests it may be one of the few assets that is able to thrive within bouts of economic turbulence. Featured image from Shutterstock.
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