Open Interest on CME Bitcoin Futures Outgrowing BTC Price
- If BTC closes above the 200-day moving average, just above $9,000, we could see $10k
- Institutional investors leading the way for a new bull market, Open interest on CME jumps 100% since the start of the year
- Investors also preferring CME to Bakkt & CME traders more bullish than other platforms
Up over 21% in 2020 to date, Bitcoin is off to a great start of a new year. The leading cryptocurrency is currently trading at $$8,883 as per Coincodex, after hitting $9,000 level yesterday after two months.
Trading volume is also keeping up with this burst of bulls, with the volume jumping above $1 billion and even going to $2 billion levels.
With the descending channel seemingly broken, the next resistance for bitcoin is now looking to be the 200-day moving average, just above $9,000. If BTC closes above this level, it’s a possibility we would finally see $10,000. This is a level where a lot of trading activity happened historically.
If the 200-day MA gets rejected, the next Point of Control (POC) lies around $8,000, which is a likely support level for now.
Institutional Investors Leading the BTC Bill Market
However, what’s interesting is that institutional investors seem to be leading the way for a new bull market.
Lately, the activity on CME has been seeing a rise which has been actually outgrowing BTC. Open interest is at about $240 million at CME which is nearly $100 million more than the last time the bitcoin was the same price level.
CME Open interest for Bitcoin futures up 100% since the start of the year pic.twitter.com/C4ETZ12FNZ
— skew (@skewdotcom) January 17, 2020
The bitcoin futures volume registered on CME Group is also much higher than in October. This year, it has been touching between $500-$700 million several times while in December, we were below $500 million.
These levels of volume and open interest wasn’t recorded the last time BTC pushed up, suggesting a fundamental change in investor sentiment on CME.
Institutional Investors Prefer CME to Bakkt
On Jan. 13, CME launched BTC options and from day one, it crushed Bakkt. In the growing options market for Bitcoin, CME ended with $2.2 million traded on the first day. This figure has been significantly higher than Bakkt’s $0.52 million daily volume. However, it is still much lower than retail-oriented Deribit, a dominant force in the BTC options market.
For now, institutional investors are preferring CME than Bakkt. When it comes to BTC futures volume, Bakkt has been oscillating between $25 million to $50 million since December. Although Bakkt has been making new highs in open interest as well, it has only reached $10 million as opposed to $240 million on CME, as per the data provided by crypto analytics firm Skew.
BTC Premium rates on CME Continue Upwards
Over the last week, the bitcoin futures premium rates continued its upward movement. While the premium rate for January contracts have been decreasing as their expiry date comes closer, March contacts have seen an increase of 0.5 p.p this week.
June futures contracts, the month after the halving in May, are also on a premium of more than 4% as investors stay bullish on BTC in the first half of 2020.
CME traders are, in fact, more bullish than other platforms, with an annualized premium rate of 13.5% for the March contracts, up about 2 percentage points than other platforms on average.