See More

Total Open Interest in Bitcoin Futures Hits ATH, but Does It Matter?

2 mins
Updated by Ryan Smith
Join our Trading Community on Telegram

In Brief

  • Bitcoin open interest has reached a new ATH.
  • Previous highs have seen price increases and decreases.
  • While the indicator does not predict price, it does suggest helpful market growth.
  • promo

The total open interest on all Bitcoin futures has reached a new all-time high (ATH), according to data from skew.
Futures contracts exist when investors purchase the right to either buy or sell units of an asset at a later date with a fixed price. The concept allows for the prediction of future pricing and rewards for that pricing without actually owning the underlying asset. All future contracts exist between a buyer and seller as an agreement to purchase at a later time. Open interest in those contracts reflects the total number of contracts that have not been concluded with a sale.

Bitcoin’s Open Interest Woes

The open interest in Bitcoin exploded in May, with the potential for a decline in the dollar and a move to safe-haven assets. This drove investors into the futures market, as many saw a healthy outlook for Bitcoin. Short sellers (those who bet the price would decline) were handed a significant blow when the price soared in early August. For long futures positions, the month has been strong. However, Bitcoin’s previous ATH occurred in late February, just before the COVID-19 crisis. The subsequent collapse in open interest reflected a considerable number of positions closing, as shorts tried to cover losses.

Long and Short of Things

The new ATH in open interest contracts represents another substantial bet on future pricing. However, open interest does not reflect the overall position, whether short or long. With the market moving rapidly, and the overall economic outlook bleak, open positions add little to price prediction. However, while not providing insight into the price, the statistic does relate to market activity. For Bitcoin, adoption and mainstream awareness is far more important than small changes in price. Long term awareness and acceptance of the coin as a viable asset will likely have a greater impact than short term trading.
Top crypto platforms in the US | March 2024
Coinbase Coinbase Explore →
AlgosOne AlgosOne Explore →
Chain GPT Chain GPT Explore →
iTrustCapital iTrustCapital Explore →

Trusted

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

Jon_Buck_userpic_basic.jpg
With a background in science and writing, Jon's cryptophile days started in 2011 when he first heard about Bitcoin. Since then he's been learning, investing, and writing about cryptocurrencies and blockchain technology for some of the biggest publications and ICOs in the industry. After a brief stint in India, he and his family live in southern CA.
READ FULL BIO
Sponsored
Sponsored