Open Interest on Bitcoin Futures show rising Investor Confidence as Bakkt performs


The Intercontinental Exchange (ICE) backed cryptocurrency trading platform Bakkt has been constantly putting more on the plate for institutional investors. Bakkt’s launch was a much-awaited one. A drawn-out regulatory approval process preceded the release by a year. The platform has now grown immensely with multiple trading products, expanded custodial services, and a consumer payments app.

The Bakkt BTC futures contracts that started off slow soon picked up the pace with 1741 BTC ($15.5 million) worth of contracts traded in one day in November. Another record followed in December as the ICE-backed crypto exchange managed to trade close to $50 mln worth of its physically-settled Bitcoin futures on Dec. 18.

Bakkt back to breaking records

Now, data from the crypto-derivatives analytics platform Skew has shown that open interest on Bakkt’s physically-settled Bitcoin futures market has reached new highs as Bitcoin crosses the $10,000 mark earlier this week.

Open interest refers to the total number of outstanding derivative contracts that have not been settled. For each buyer of a futures contract, there must be a seller. From the time the buyer or seller opens the contract until the counter-party closes it, that contract is considered ‘open’.

The data from Skew shows that Open Interest on the Intercontinental Exchange-backed Bakkt exchange has hit a new all-time high of $17 million for the Bitcoin futures contracts on February 12. The last all-time high had been just a week earlier, with Open Interest on the contract reaching $13 million on 6 February.

Even though the majority of investors in BTC futures trading are still coming from traditional cryptocurrency exchanges, such as Huobi, BitMex, OKEx and Binance, regulated platforms like CME and Bakkt continue to act as a bridge for institutional investors to step into the cryptocurrency market without facing the risks.

CME shines equally

Open Interest for Bitcoin Futures contracts on the Chicago Mercantile Exchange (CME) also touched a 7-month high, crossing $313 million. While a rising OI isn’t a sign of positive price action, it does solidify the fact that the institutional confidence in the space is on the rise while facilitating greater price discovery as the contracts’ expiry date approaches this quarter.

Also recently, CME doubled its options trading volume within the first week from launch. The platform smashed Bakkt’s day one trading volume at $2.19 million versus the latter’s $1.15 million.

Bitcoin has already started the year with a bang as the coin crossed the $10,000 mark this week while continuing to show a bullish tendency to keep growing. Some feel that this is due to the upcoming Bitcoin halving in May, but it is still hard to ignore the effect of the increase in derivatives trading and the new doors that are being opened by companies like Bakkt and CME.

Anna Larsen
Anna Larsen has been a Crypto enthusiast since 2016. Fascinated by the technology and its usecases she decided to pursue a career in content creation related to this space. The journey has been exciting ever since.

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