Bitcoin

A record $ 584 million interest in Litecoin futures signals a growing institutional flow

Litecoin (LTC) may be 60% off its December 2017 all-time high of $ 420, but that hasn’t stopped open interest in its futures contracts from reaching a record $ 584 million. This makes LTC the seventh largest cryptocurrency in terms of market capitalization and third place after Bitcoin for Bitcoin derivatives. (BTC) and Ether (ETH).

Sum of open positions in Litecoin futures. Source: Bybt.com

As we can see above The total of open positions for LTC futures increased by 285% in the last three months. We have to take into account that such an event is not necessarily positive, since futures contracts require both a buyer (long position) and a seller (short position). However, this growing interest allows even more important actors to participate.

Another interesting event is the recent introduction of Ether Futures contracts from the Chicago Mercantile Exchange (CME) This is a sign that other cryptocurrencies could follow shortly.

A record $ 584 million interest in Litecoin futures signals a growing institutional flow
A record $ 584 million interest in Litecoin futures signals a growing institutional flow

Litecoin is the third largest holding in the Bitwise 10 Crypto Index Fund (BITW), The assets under management of this fund have recently exceeded USD 780 million.

Grayscale mutual fund holdings. Source: grayscale

Grayscale’s Litecoin Trust (LTCN) added an additional $ 210 million to its assets under management, which were originally issued to institutional investors. These growing numbers clearly demonstrate Litecoin’s potential.

Long positions are still under water

By looking at daily settlements, investors can better appreciate how traders have used leverage. Unexpected price swings tend to result in more sell-offs than ongoing trends, such as Litecoin’s recent 15% rally to $ 174.

Sum of the daily settlements of LTC futures. Source: Bybt.com

In the graphic above The largest green candle represents long positions that were forcibly closed on January 10th when the price of LTC fell 32% in 18 hours.

On the other hand, The rally on February 5th to $ 164 liquidated $ 56 million in short positions. However, that still doesn’t compare to the declining move of $ 128 million in January.

The volume couldn’t keep up with the recent rally

Litecoin’s failure to break the $ 186 high on Jan. 10 was followed by a decline in volume, indicating a lack of interest at current levels. Total LTC trading volume is down 12% in the past 30 days.

LTC volume in USD on spot exchanges. Source: Coinalyze.net

The current open interest in futures of $ 584 million is significant compared to the average daily trading volume of $ 980 million in LTC on spot exchanges.

From a price analysis perspective Litecoin and Bitcoin The cash price movement appears to be lagging behind the bearish and bullish movements of Bitcoin. Retailers and institutional distributors are likely to be aware of this relationship.

Traders should also consider Given Etheruem’s high gas fees and Bitcoin’s rising transaction costs, investors looking for faster transfers and cheaper fees could fuel a longer Litecoin rally.

When Litecoin’s privacy features are finally implemented, This could finally give the altcoin the much needed momentum to break above $ 200 and targets near $ 300.

The views and opinions expressed here are solely those of automobiler and do not necessarily reflect the views of Cointelegraph. Every investment and business move is associated with risks. You must do your own research when making a decision.

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