Will Bitcoin Hit $400,000? | THE TRUTH

Open interest in the bitcoin futures market at historic highs
CONTENT

  • Bitcoin futures open interest hits record highs

  • Previous growth provoked both ups and downs in prices

  • The indicator indicates the growth of market activity

International consortium of news organizations developing transparency standards.

The general open interest in all bitcoin futures has reached a new all-time high, but experts are not sure if this is a signal for an increase in prices.

A futures contract gives an investor the right to buy or sell an underlying asset on a specified date in the future (the contract’s maturity date) at a pre-agreed price. The mechanism of these financial instruments allows you to place bets on price movements without buying the underlying asset..

Read about what futures are and how to trade them in our article..

#bitcoin futures open interest is sitting at all-time-high at $ 5bln

Market has been quiet this week but there are a lot of open positions! pic.twitter.com/ljDDIQjLTO

– skew (@skewdotcom) August 21, 2020

All futures contracts represent an agreement to purchase an asset in the future, entered into between a buyer and seller of a financial instrument. Thus, open interest in futures reflects the total number of unclosed contracts, that is, those for which the purchase and sale has not yet taken place. Earlier, the editorial staff of BeInCrypto reported an increase in open interest for options on bitcoin.

Open Interest in the Bitcoin Futures Market ...

Roller coaster

Open interest in bitcoin futures surged in May. Experts attributed this to risk aversion and the fall in the dollar. Many investors flocked to the futures market, betting on the growth of bitcoin.

Short sellers (those who bet on the fall in price) were hit hard by the August rally in bitcoin. However, holders of long positions benefited.

The previous all-time high for open positions was reached at the end of February before the onset of the coronavirus crisis. The subsequent collapse in open interest reflected the closure of a significant number of positions as short sellers tried to cover losses.

Read an interview with Andrey Tonkolitko, CEO of CryptoArt, about the future of Bitcoin futures and options.

Long or short

The new all-time record for open interest gives an indication of how the community thinks about future price movements. However, this statistic reflects only the total number of open contracts and does not say anything about positioning. In other words, we do not know who is more, sellers, or buyers..

When the market is in motion and clouds are gathering around the economy, open positions are not very informative for predicting price dynamics. On the other hand, we can conclude about the growing market activity.

For bitcoin, mass distribution and widespread awareness are far more important than minor price changes. Long-term awareness and acceptance of the coin as a viable asset is likely to have longer term implications.

Disclaimer

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