Bitcoin

Record open interest in Bitcoin futures shows that professional traders are still expecting a BTC price of $ 20,000

The price of Bitcoin (BTC) did not exceed the $ 20,000 level this week, but several records were set in terms of volume and open interest on the way to $ 19,484. It was a remarkable achievement Open interest in aggregated futures contracts on derivatives exchanges reached $ 7.4 billion.

Open interest in BTC aggregate futures. Source: Skew

As we can see above It’s been up 110% over the past 6 months, and it’s also worth noting that the Chicago Mercantile Exchange (CME) currently has more than $ 1.1 billion in these contracts. These data are irrefutable evidence of the growing institutional involvement in the BTC markets.

The volume rose to new highs. Will the BTC price follow?

The total volume of the cryptocurrency market also hit an all-time high on November 24th. Some investors might conclude that this is a bullish event, but it’s important to remember that there is a buyer and a seller on every trade. So, How can the entry of wholesalers be viewed as bullish?

Daily total volume of cryptocurrencies (in USD). Source: TradingView
Record open interest in Bitcoin futures shows that professional traders are still expecting a BTC price of $ 20,000
Record open interest in Bitcoin futures shows that professional traders are still expecting a BTC price of $ 20,000

The total volume of each spot exchange reached $ 285 billion this week. However, there is always a chance that some of these exchanges have increased in volume. Even so, $ 285 billion is an 11% increase from the March 13th high.

Yesterday, the Bitcoin options markets also achieved a high level of open interest. These are contracts that a buyer pays in advance in order to buy (call options) or sell (put options) at a fixed price in the future.

Open interest from BTC aggregate options. Source: Skew

Note that the current $ 5 billion open positions from BTC options represent a 316% increase from the $ 1.2 billion level six months ago. Although this includes both call and put options, This impressive increase in liquidity is a good thing.

The open interest in options deserves special attention

A high level of open interest tends to attract the attention of new arbitration tribunals and open doors to larger institutional clients. However, in order to better assess how professional traders set the prices for the continuation of the current bull run, We need to analyze the 25% slope of the delta of options.

A delta falling by 25% indicates that put options cost more than similar calls, indicating bearish sentiment. On the other hand, a delta sloping to the negative side indicates an upward movement.

25% slope of the delta for 1 month options. Source: Skew

The graph above shows that the -27.5% number for November 24 is virtually in line with its all-time low. No doubt This is an extremely bullish condition and the data shows that options traders are unwilling to sell upside protection.

While the $ 20,000 level has not yet been exceeded, there is enough reason to celebrate The market is healthy with no evidence of excessive leverage or declining investor interest.

The views and opinions expressed here are solely those of darer 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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