Bakkt Open Interest Breaks All-Time High as Bitcoin Price Slides
Bakkt futures allow for betting both on the upside and the downside of BTC. Now, a bearish trend ahead of the year end has reignited futures activity, with peak open interest. With a record number of contracts waiting for BTC price moves, signalling the entrance of new funds from both buyers and sellers.
— skew (@skewdotcom) December 17, 2019
For Bakkt, open interest does not signal actual BTC changing hands, as very few of the traders take physical delivery. But the potential for a decisive price move may make traders achieve gains on trading the actual contracts.
Open interest has been trending upward in December, coinciding with the breakdown of BTC prices and the opening of a clearer potential for a downward trend.
The open interest on the front month is more than 3 times bigger than it was on the Nov’19 contract at the same period. Wondering what fraction of it will be held for physical delivery🤔
— ecoinometrics (@ecoinometrics) December 10, 2019
BTC Derivatives Gain Importance
For BTC spot traders, the futures market in a way “prints more BTC”, as anyone can open a position and later settle it, or roll it over, without owning physical BTC; unless of course they take physical bitcoin delivery from Bakkt.
But futures become even more active in the past year, leading to direct, short-term fight of bulls and bears. Actual BTC owners have taken away their coins, and flows to spot markets are slowing down in December.
As BTC looks set to slide further, bearish attitudes boost the interest in futures. The BitMex contract is also showing heightened activity, with almost no outflows.
Seems safe to say that Bitmex traders have remained indifferent about the exchange’s email debacle that occured at the beginning of November. They had negative cumulative BTC flows for the first 11 days, but haven’t had a negative cumulative flow since.
— Matt Casto (@mcasto_) December 17, 2019
Crypto-to-crypto exchanges post a much higher open interest, with BitMex at the lead with above $706 million, and OKEx also close to the top.
The bitcoin market also saw the arrival of options on futures, launched this December 9 for US traders. Bakkt also opened a cash-settled product, open on ICE Singapore from December 13. In 2020, the CME futures market is also expected to launch an options contract, adding another layer of price expectations without access to the underlying asset.
Bitcoin spot market has also expanded, but there is a shift in trading activity. BTC sees an outflow of Tether (USDT) activity, with the stablecoin moving to other asset markets. BTC spot volumes reached above $25 billion in 24 hours, while USDT volumes expanded to above $30 billion in 24 hours.
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