Bitcoin’s performance in January 2020 has been one for the books as the major cryptocurrency, which faced flat trading and bearish trends in Q4 of 2019, suddenly kicked into life. Several factors are being tied to this surge in the new year, one of which is increased derivative trading interest.
Futures trading has become big business for Bitcoin with interest spiking from institutional platforms like CME and Bakkt, as well as the introduction of futures and options trading from the Chicago based trading house. More so, increased futures trading on exchanges like OKEx, Binance, and BitMEX have seen this market breach $20 billion on two occasions this year.
The recent surge in Bitcoin’s price that took it over $9,000 this week has also had its effect on the volume of futures trading, which was on a slow slide after it made it as high as $25 billion on January 14. The last four days have seen ever-increasing volume to match the growing price of the coin.
Futures volumes have been rising for four consecutive days as bitcoin approaches the $10k mark pic.twitter.com/oMIPTWj5Mg
— skew (@skewdotcom) January 29, 2020
Excitement in the Bitcoin Market
Bitcoin’s price has moved from $7,180 to a high of $9350 in the past 29 days. This is significant, and unusual, as Q1 for Bitcoin has traditionally been a poor performing few months for the cryptocurrency. Since 2014, Q1 returns for Bitcoin have not only been feeble, there have only been two years where they have been in the green.
The excitement in the market could well be due to the expanding derivatives trading ecosystem. This snowballing effect is not uncommon in the cryptocurrency space and has been seen in Google searches, which help increase Bitcoin’s price but also rise at renewed upward price action.
With the last four days all tracking upwards in the futures trading market, there is a sense of anticipation, especially regarding the $10,000 mark. This halfway point to Bitcoin’s all-time high is of tremendous sentimental value to traders, and the increased futures trading volume could be designated towards that.
More to Come on Friday?
It is also important to note the effect that the derivative trading market can have on the Bitcoin market. This is because it is not only large institutions at places like CME who can move the markets with big open positions but also Bitcoin whales at cryptocurrency futures platforms.
Friday, the end of the month, will be an important date for the futures market and could have a volatile effect on the Bitcoin price as an expiration approaches. Not only that, part of the reason for the growth in futures trading is BitMEX’s open interest climbing continually.
$BTC Futures expiration this coming Friday.
Bitmex open interest (open positions size) makes new highs every hour.
HUGE move coming up. I'd say within 24-48 hours we teleport to somewhere non of you expect.
I'm generally bullish on this one but won't let my guard down.
— BitBit.BTFD (@BitBitCrypto) January 28, 2020