Bitcoin Market Update: MicroStrategy Entered, CME Open Interest Made new High of $841 Million
Professional investor’s “interest” in Bitcoin continues to grow immensely. While this cannot be considered bullish regularly – considered alone, it signals a significant increase in the number of professional investors interested in Bitcoin. Further proof of this comes as MicroStrategy, a Nasdaq-listed company worth more than $1.2 billion, announced the acquisition of 21,000 Bitcoin for $250M. Open bitcoin futures open interest on the Chicago Mercantile Exchange hit a new high of $841 million.
This shows that, despite some critics’ “statements” about cryptocurrencies, savvy investors and entrepreneurs have recently built up sizeable positions in bitcoin and legacy coins. Usually, this indicator should indicate a significant increase in the number of professional investors interested in Bitcoin futures. One of the best ways to measure the inventor’s mood for futures contracts is to measure their premium against the bitcoin market price on spot exchanges.
The Other Useful Data by Premium Futures
By postponing the completion date, it is only natural that sellers should take more money out of their hands. Excessive premiums allow arbitrage to be conducted by selling forward contracts for the same amount bought on the spot market.
Typically, the indicator should display a 0.5% to 1% premium for 1-month contracts in CME futures.
This situation, known as contango, is due to a lack of liquidity in the market due to the low price of bitcoin and high demand for the currency. This is particularly true because of the increasing demand and the creation of new jobs under ideal conditions.
The Growing CME Bitcoin Option Market
Although the CME bitcoin options market is relatively new and was not introduced until January 2020. Compared to other leading derivatives such as the US dollar futures market, open interest in bitcoin futures seems modest compared to the rest of the world. CSE’s leading derivatives market is $1.5 billion, while its free benefits reached an impressive $440 million at the end of June. It has a consistent trend and is heavily focused on call options, but not so much on short-term opportunities.
This means that investors can buy CME bitcoin futures at a fixed price, also known as a strike. As things stand, the next FOMC meeting for the Bitcoin options market is due on August 28. Its options contracts expire at the end of the month, causing the sharp drop in the chart’s open interest rates.
CME Options Shows Rapid Growth
Since the call options are usually related to bullish strategies. They are also used for covered calls that are more neutral and aim to generate fixed income if the underlying remains above a certain threshold. Recognizing this difference is crucial to accurately assess whether call options have been used as a market-neutral strategy or not.
The ideal approach to decide if a call alternative is utilized for bullish or impartial positions is to watch the level of open financing costs well above or beneath current market levels.
The CME option contracts represent 5 BTC, and the most critical strikes for August and September are expressed in the chart above.
The first thing to note is the lack of volume above $10,000, and 80 percent are called options, as these are an indicator of the economy. If you look at the number of calls and calls in the CME market for bitcoin futures options, you can conclude that they are mainly used for bullish strategies.
To determine whether this applies to the broader options market, we can check the total return per strike to summarize the derivatives on the exchange. Substantial open interest in market turbulence is neutral or bear-like and focuses on the call and put options.
The Present Statistics Compared to the Past
Although there is a significant increase in open interest in the Bitcoin options market, signals a new mood in the options markets, and confirms call options’ CME analysis. There are currently a total of 1.5 million open positions in bitcoin futures and options totaling $514 million, up from 1 million at the end of July.
Will this pattern be repeated over time, or does the futures and options indicator signal a lift? By observing subsidiaries’ markets, we can check the mind-set of expert merchants and better evaluate whether the drawn-out pattern in the bitcoin alternatives and prospects showcase is falling. Therefore, the futures and options indicators should be a good indicator of the general mood in financial markets in general, and the crypto market.
BTC tested $12,000 before falling 20% over the next five days in August 2019. It’s veteran Bitcoin investors who know how volatile digital investment is. Despite the recent surge in interest in Bitcoin derivatives, there are currently no convincing signs of compatibility in the BTC derivatives market.
