18 Jan 2021

Open interest in the futures market still sees new highs

The open interest in the bitcoin futures market has reached the double-digit billions lately.
On January 14th, the open interest in the bitcoin futures market reached $13.1 billion. That’s a growth of 203% in the last three months. In the same three months, the bitcoin price has grown by 221%, implying that the open interest in terms of bitcoin has declined. The open interest denoted in bitcoin has declined by 20 000 BTC in the three months, suggesting that there are fewer bitcoins at risk in the futures market now than before this bull run. This is an interesting observation. The futures market has drifted towards USD or stablecoin-settled futures throughout 2020, and a majority of the traders are likely focused on maintaining and building a dollar-PnL. Thus, we deem the open interest denoted in USD as the most reasonable way to measure the futures market’s open interest. The growth in open interest suggests much speculative interest in bitcoin now, and one should be prepared for more volatility onwards.
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