Bitcoin Open Interest Reaches New Highs as Price Surges to $71,000
Key Insights
- U.S. spot ETF inflows surge, driving Bitcoin price to $71K and setting new OI records.
- CME open interest rises by 9%, signaling bullish sentiment despite tempered funding rates.
- Perpetual futures funding rates spike to 15%, indicating strong bias toward long Bitcoin trades.
Bitcoin’s open interest (OI) set new records as the cryptocurrency’s price hit $71,000 on Tuesday, its highest level since June. OI, the total number of outstanding derivative contracts, experienced its biggest one-day rise since June 3. Data shows the increase in OI to over 600,000 BTC, with a notional value of $42.6 billion, indicating a wave of new money entering the market.
Source: glassnode
U.S. Spot ETF Inflows Fueling Market Momentum
Recent data indicates that U.S.-listed spot exchange-traded fund (ETF) inflows are contributing to the surge in Bitcoin’s price. Spot ETFs saw cumulative net inflows of $2.7 billion since mid-October, driven primarily by institutional investors. BlackRock’s iShares Bitcoin Trust (IBIT) alone recorded $2.2 billion in net inflows, setting a new benchmark by holding over 400,000 BTC.
The shift in ETF flows suggests a move toward bullish long positions, departing from the earlier trend of neutral basis trades that dominated the market. The basis trade involves taking a long position on ETFs while simultaneously shorting futures, which contributed to a sideways trading pattern since March. Analysts suggest that the latest ETF inflows are more directionally aligned with price gains, reflecting stronger investor sentiment.
CME Open Interest Spikes Amid Futures Activity
The Chicago Mercantile Exchange (CME) recorded a 9% rise in open interest over 24 hours, bringing total OI to 171,700 BTC, or $12.22 billion in value. This accounts for 30% of the global futures open interest market. Despite the surge, funding rates for perpetual futures—periodic payments to maintain parity with spot prices—remain below previous highs from March, suggesting restrained demand despite the broader bullish sentiment.
Market analyst Checkmate noted a divergence between ETF inflows and CME open interest. “We have a divergence between Bitcoin ETF inflows and CME Open Interest. ETF inflows are ticking meaningfully higher, while CME Open Interest is up, but not as much,” Checkmate observed.
Additionally, the outflows from the Grayscale Bitcoin Trust (GBTC) have been minimal, supporting the view of a trend toward longer-term bullish bets rather than arbitrage plays.
Perpetual Futures Funding Rates Rise
Perpetual futures markets witnessed a sharp increase in funding rates, reaching 15%—one of the highest levels recorded in recent months. This trend signals strong bias toward long trades, as traders are willing to pay a premium to maintain bullish positions. Funding rates in these markets ensure that perpetual contract prices align with the underlying spot prices.
Singapore-based QCP Capital remains optimistic about Bitcoin’s trajectory, stating, “With rising expectations around a potential Trump victory boosting both stocks and Bitcoin, we believe BTC is well-positioned for medium-term gains.” As funding rates rise, there is potential for increased volatility, especially with contracts nearing expiration. Traders often adjust or roll over their positions during these periods, which can trigger significant price movements.
Divergence Between ETF Inflows and Basis Trades
Recent activity in the futures and ETF markets shows a divergence in strategies. Checkmate, an analyst, pointed out the shift from neutral basis trades to more directional ETF inflows.
Traditionally, basis trades involve taking advantage of price differences between spot and futures markets. However, the current ETF inflows appear to be more aligned with direct long purchases, indicating a shift in market dynamics.
Meanwhile, Andre Dragosch, head of research at Bitwise, suggests that the increase in CME open interest reflects ongoing cash-and-carry trades. “There was an increase in net short positioning judging by the change in net non-commercial positioning on CME since early September,” he stated. This rise in net short positions coincided with a broader increase in CME open interest, signaling that arbitrage strategies might still be in play.
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