Bitcoin’s price has reiterated a bit to $9,500 but is still looking extremely strong, recording eight weeks of price gains in a row not seen since early 2017.
It needs to be seen if the price can push above the resistance level around $10,500 with halving next week.
The futures market is steadily back in contango but there are structural differences from the last time BTC price was at this level in February.
For starters, although the funding rate has turned positive just now, it is still close to zero. In Feb. it was highly positive, as longs paid shorts. Additionally, the premium rates on futures contracts are still low, the annualized premium rates for June contacts are one-third of February’s rates.
But this also means lower risk for large price dumps from liquidations as longs are less leveraged. Both short liquidations and futures markets have the possibility for further growth as they haven’t turned bullish yet.
This also points toward a spot driven rally and that the futures market has yet to be turned completely bullish.
Bitcoin investors turn to CME
The futures market has started to see the shift as the open interest on CME bitcoin futures made a new all-time high at $489 million.
The regulated bitcoin futures market grew faster than any other bitcoin futures market over the past month. Tim McCourt, Head of Equity Index and Alternative Investment Products at CME said,
“The recent growth of open interest in our bitcoin futures contract demonstrates market participants are increasingly turning to CME Group to express views and manage their risk amid ongoing global uncertainty.”
This growth actually coincided with the news that prominent macro investor Paul Tudo Jones started buying bitcoin futures.
Back of the envelope analysis of Tudor's bitcoin position.
. News of $2T US fiscal package: Mar/21 (Kudlow)
. Fed announces unlimited QE: Mar/23
=> Assume Tudor started buying a few days later: Mar/25
That's exactly when CME open interest started to spike. pic.twitter.com/EFFgEG52ez
— Alex Krüger (@krugermacro) May 8, 2020
Its competitor Bakkt that launched physically-settled bitcoin futures in Sept. 2019 only has a 5% share of the US bitcoin futures market and recently appointed its third CEO. The open interest on Bakkt bitcoin futures is just $13 million, still down from over $18 million in mid April. Compared to BitMEX’s 40% decline in traffic, Coinbase only had a 7% drop and Binance 2%. Meanwhile, OKEx saw the biggest uptick of over 238% (up from 1.73 million to 5.85 million)
Also, while other exchanges like Binance and Huobi saw about 10% positive change in their BTC supply, BitMEX had declined 16% since Black Thursday.
— TradeBlock (@TradeBlock) May 6, 2020
Binance actually overtook BitMEX and was the only exchange to see derivatives growth in April, as per CryptoCompare report.