Bitcoin Futures Open Interest Nears Record High at $21 Billion
Date: 2024-02-14 Author: Dima Zakharov Categories: BLOCKCHAIN
Bitcoin Futures Interest Reaches $21 Billion
The open interest in Bitcoin futures trading has climbed to over $21 billion, approaching the record high of $24 billion set in mid-November 2021. CoinDesk, citing data from analytical service Coinglass, reports this significant uptick in interest.
Understanding Open Interest
Open interest refers to the total number of buy orders at the opening of the market. In futures and options trading, it represents the total number of contracts outstanding at a specific point in time. This includes contracts that have not been executed, expired, or settled through asset delivery.
Market Participation Metric
Open interest serves as a metric for assessing market participants' involvement in a specific futures contract. A surge in open interest, coupled with rising asset prices, may indicate an active upward trend.
Factors Driving Growth
The rise in futures interest coincides with Bitcoin's price surge of over 25% in the past three weeks, primarily driven by substantial investments in Bitcoin spot ETFs in the US.
Managing Market Risk
Despite the increase in interest, the overall market leverage remains low, mitigating the risk of price collapses and high volatility due to forced closure of long or short positions. According to CryptoQuant, Bitcoin's leverage ratio has seen a slight increase but remains far from last year's levels.
Current Outlook
Currently, the open interest in Bitcoin-denominated futures stands at 430,500 bitcoins, significantly below the peak of 660,000 bitcoins in October 2022, as per CoinGlass data.
