Bitcoin futures open interest just surged to $14 billion and analysts believe that this was due to the recent wave of institutional investors being behind the recent spike as we are reading more in our latest Bitcoin news.
The Bitcoin futures open interest reached more than $14 billion and analysts believe that it was due to the institutional investors that pushed Bitcoin’s OI. The total open interest across Bitcoin futures markets reached more than $14 billion according to the market analytics company Skew. Bitcoin futures open interest refers to a sum of all opened futures contracts without the ones that were closed.
— unfolded. (@cryptounfolded) February 7, 2021
Bitcoin futures contracts are basically deals that let people purchase BTC at a predetermined date in the future and they represent bets on the future price of BTC. So if you think that BTC will go up, it could eventually net you a bargain. This means that there’s more than $14 billion worth of outstanding bets on the BTC price. Bitcoin’s open interest reached a new high because as Mati Greenspan put it:
“people finally realize that it pays to hold Bitcoin for the long term. It’s an ongoing process, so the number keeps rising over time as more participants join the market.”
China’s sixteen-day festival for the New Year celebrations starting on February 12, coincides with large sell-offs of BTC and many Chinese investors decide to cash out around this time when it’s the most important holiday season. Often termed the “Chinese New Year dump” the phenomenon is similar to what the economists named the “pre-holiday effect” in the West regarding how many short-seller investors close risky positions before Christmas.
Greenspan doesn’t expect that the Chinese investors will have a huge impact around this time of the year unlike the previous years:
“Much of the new demand seems to be coming from institutional funds in the US and Europe.”
Coinciding with the BTC futures OI ATH is the pump to $40,000 as Bill Miller announced his plans to put 15% of the Miller Opportunity Trust’s $2.25 billion assets in the Grayscale BTC trust and now the coin trades at $37,851. Other high profile investors like Ray Dalio and Tesla’s CEO Elon Musk pledged support for the coin a while ago. Dalio said that Bitcoin is one hell of an invention and added that:
“I and my colleagues at Bridgewater are intently focusing on alternative storehold of wealth assets, and Bitcoin won’t escape our scrutiny.”
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