The demand for institutional investors for Bitcoin (BTC) became evident on Nov. 10 as the Chicago Mercantile Exchange (CME) Bitcoin futures flipped Binance's BTC futures markets in terms of size. According to BTC derivatives metrics, those investors are showing strong confidence in Bitcoin's potential to break above the $40,000 mark in the short term.
CME's current Bitcoin futures open interest stands at $4.35 billion, the highest since November 2021 when Bitcoin hit its all-time high of $69,000–a clear indication of heightened interest, but is it enough to justify further price gains?
The impressive 125% surge in CME's BTC futures open interest from $1.93 billion in mid-October is undoubtedly tied to the anticipation of the approval of a spot Bitcoin ETF. However, it's important to note that there's no direct correlation between this movement and the actions of market makers or issuers. Cryptocurrency analyst JJcycles raised this hypothesis in a Nov. 26 social media post.
What if CME (US institutions) opened longs to hedge for the spot #Bitcoin ETF approval which might be imminent?
Open interest surely surged on CME in the last couple of weeks.
To avoid the high costs associated with futures contracts, institutional investors have various options. For instance, they could opt for CME Bitcoin options, which require less capital and offer similar leveraged long exposure. Additionally, regulated ETF and exchange-traded notes (ETN) trading in regions like Canada, Brazil, and Europe provide alternatives.
It seems somewhat naive to believe that the world’s largest asset managers would take risky gambles using derivatives contracts on a decision that depends on the U.S. Securities and ExchangeRead more on cointelegraph.com