- With the volume dragging down, Bitcoin might not be able to close above $8,500
- Open interest on Bakkt and CME surging, CME asset managers longs on BTC
- CME premiums consistently higher than other platforms, institutional traders more bullish on BTC
Bitcoin has been experiencing a lot of ups and downs for the past few days. Currently, BT/USD is trading at $8,162 in green.
Will Bitcoin be breaking out of its descending channel? The digital asset is facing a key resistance level around $8,500 and its first attempt to break out of the six months long downwards trend was rejected on Jan. 8.
Initially, with the volume flowing in, it was a good opportunity for the bulls to take control and have a weekly close above $8,500 to make the case for a trend shift. But the volume has already started dragging down. From $1.6 billion earlier this week, the top ten exchanges with real volume are now trading only $625 million.
Also, looking back at October, when BTC price went from above $10,000 to $6,650 in late November 2019, it is possible that this time as well, BTC could experience a channel rejection and continue towards lower levels that could lead the digital asset to the $5,500 area.
Open Interest on Bakkt & CME Surging
Determining BTC’s next move might not be possible but everyone is trying and institutions are extremely excited about BTC’s future, according to the open interest on regulated crypto trading platforms.
During the first week of 2020, the weekly volume on Bakkt has been above 3,300 BTC on average which has been 25% higher than the previous week’s average.
On CME as well, asset managers are bullish on BTC price as trader Cantering Clark notes,
“Similar pattern to what we saw in early 2019. Commitment of Traders Report for the CME. Dramatic increase in longs by Asset Managers. Highest since July. These are not “fast money”.”
Also, CME recorded the most activity in three months before the launch of Bitcoin options on Jan. 13. As we reported, JPMorgan Chase strategists are noting “high anticipation” among the institutional investors about these new BTC contracts launch.
The open interest on CME futures has increased 69% from year-end as well.
Most active week in three months at the CME ahead of the options launch this Monday – looking strong! pic.twitter.com/k4tjN1BkNc
— skew (@skewdotcom) January 11, 2020
BTC Trading at a Premium on CME
If we look at the price of BTC on CME, it has been trading on a premium that indicates long term bullish sentiment.
CME traders are trading BTC at higher premiums than any other platforms, the rate on CME for March contracts is now at 2.18%, up from 1.61% from last week. The gap between the trading platform is also widening, with the premium on CME for June 2020 contracts being close to 4% while on other platforms, it’s about 3.5%.
Interestingly, CME premiums are consistently higher than other platforms, suggesting that institutional traders are more bullish on the flagship cryptocurrency.
Looking back at the historical data, Arcane research found that CME had an average annualized premium rate of 8.36% since late Oct. 2019 while other platforms have 6.46% over the same period.