Bitcoin Futures: Institutional BTC Longs on the Rise; Price Breakout Soon?
Bakkt Recovering From Slow Start
The launch of Bakkt, the first federally regulated bitcoin futures exchange, got off to a rocky start last month after roughly a year of ensuring compliance with US laws and regulations. The first few days of their launch were unimpressive, to say the least, with extremely low volume on the first day slowly picking up over the next week. The disappointing launch also had a negative impact on BTC’s market price, which saw a drop of over 10% in the following days.
However, the volume has been increasing significantly in the month since Bakkt’s launch. The first few days averaged less than $1M in trading volume. However, at the end of October bitcoin futures volume had increased five times. In addition, open interest statistics have been rising exponentially in the past two weeks.
Institutional Investors betting on Bitcoin Price Rise
The increasing futures trading volume is absolutely a good sign for bitcoin investors. However, it isn’t the only metric that is pointing to a price increase. Another notable futures platform, hosted by the Chicago Mercantile Exchange, has seen a large increase in long positions on the BTC futures market.
With futures markets, investors especially institutional participants can use their money to make predictions on the direction of an asset’s price. It’s known as a contract. If an investor believes the price will decrease over a given time period, they take what is called a “short position.” If they believe the price will increase, they take out what is called a “long position.”
Depending on what the price does during the time period, the contract will result in the investor making money or losing money.
After a few months of stagnation and a large dip at the beginning of the month, CME has finally found some consistent increase in the open interest in institutional bitcoin long positions. As the total approaches 1.5K BTC, some analysts are predicting that we could see a breakout to even higher numbers.