03 Jan 2022

CME’s BTC futures open interest in free fall

While CME’s BTC futures open interest sees a steady decline, ProShares’ BITO ETF maintains its AUM. The ETF now accounts for 45% of the open interest in CME’s bitcoin futures.
Source: Skew, BITO
CME’s bitcoin futures has seen a sharp open interest decline lately. After peaking at nearly $6bn, the OI sits at $2.6bn with a muted futures basis. This suggests that institutional traders are cautious with bitcoin at the moment.In the last quarter, we saw several futures-based ETF approvals, with BITO being by far the most successful launch to date. BITO currently accounts for 45% of the open interest in the BTC futures market with its $1.2bn AUM.When excluding the AUM of BITO, the open interest on CME is back on par with the levels from August and September.BITO itself saw a relatively slow December. The fund saw slight inflows in December but not on par with what the fund experienced in November.The plateauing inflows to BITO could be caused by the fund’s underperformance vs. bitcoin caused by costs affiliated to rolling the futures contracts, nearing 3%.By Jan 20th, Fidelity will receive the final verdict on their spot-based bitcoin ETF. While all spot-based ETF filings thus far have been rejected, Fidelity has contributed with more research on the price discovery of bitcoin than other applicants approved and has reportedly also arranged a meeting with the SEC. Based on the previous rejections, it seems unlikely that Fidelity's filing will be approved, but among the applicants, Fidelity is probably the most likely candidate to get approved. Spot-based ETFs would be affiliated with fewer costs and could thus attract new capital and vitality to bitcoin and is worth directing attention towards.
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