Bitcoin

Bitcoin price is rocking the expiry of $ 157 million futures. Is $ 12,000 the next stop?

The expiration of the Bitcoin (BTC) futures on Friday was flawed in both price and volume impact. Open interest fell to $ 157 million and barely moved from its $ 5 billion mark.

As CoinTelegraph correctly predicted on Thursday, This process of the CME Bitcoin Futures was irrelevant. Several August deals worth $ 125 million were signed on Friday. however, preliminary data suggests less than $ 40 million was not renewed for the next several months.

Total Open Interest, MILLION USD

Bitcoin price is rocking the expiry of $ 157 million futures. Is $ 12,000 the next stop?
Bitcoin price is rocking the expiry of $ 157 million futures. Is $ 12,000 the next stop?

Total open interest in millions of dollars. Source: Bybt.com and CoinTelegraph

The graph above shows us the total change in open interest over the past 24 hours. although the dates include reverse (perpetual) swaps and the remaining calendar months.

However, This contrasts sharply with the July expiration, when futures contracts were traded for $ 500 million.

The size of the expiry depends on the most recent price activity

The main reason for the traders’ indifference to the end of Friday It appears to be the inability to set support levels above $ 11,200 in the past few weeks.

As CoinTelegraph mentioned earlier this week, “Current macroeconomic factors suggest a positive medium to long-term price cycle, but suggest that momentum will ease in the short term and that a period of consolidation will enter.”

Bitcoin intraday price chart, USD. Source: TradingView

Bitcoin intraday price chart in USD. Source: TradingView

The markets have behaved completely differently in the past few weeks after each futures contract expired, so we saw a different outcome on the settlement. There was a 26% bull run at the end of July while the last two weeks have been flat.

Open interest is more important than the small number of maturities

Some traders may be disappointed with the recent loss of momentum for Bitcoin. However, this does not mean that professional investors have left the futures markets. The lack of volume or the stability of the futures open interest means that the bets have already been placed.

Investors should only be concerned if open interest declines. This is a sign that seasoned traders have reduced their exposure. This is of great importance during the price consolidation phases.

Bitcoin futures aggregate open positions

Aggregated open interest in Bitcoin futures. Source: Skew

Such a bearish scenario is not the case, as the total open interest of all exchanges more than doubled over the course of 2020. The current $ 4.9 billion mark is just $ 800 million, slightly below the August 17th all-time high.

Bitcoin appears to be highly correlated to gold and that’s fine

Independent of the 30- and 90-day correlations Tight intraday movements between gold and bitcoin sometimes take a few days. This is especially true when big macro events like the Jackson Hole conference this week dominate the scene.

BTC / USD, gold price action

BTC / USD and gold price action. Source: TradingView

You’re welcome, Note that the above table has different scales, as the percentage fluctuations vary between assets. However, the similarity of the intraday movements between gold and bitcoin is very impressive.

This short-term correlation should not be construed as a sign that Bitcoin is becoming more of a global reserve asset. But as a reminder that cryptocurrency markets are also significantly affected by the same external events that run traditional markets.

With regard to the remaining terms of the futures market throughout the year You should keep an eye on the base (contango) and long / short average of the major traders as both provide very valuable information on the sentiment of the largest investors.

The views and opinions expressed here are solely those of author 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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