Cryptocurrency Derivatives Series: What Does Spike in BTC Futures OI And Dip in Bitcoin Price Below 8k Mean?

After bullish trading streaks about two months or so and June month began sensing some sort of correction again, Bitcoin (BTC) upswings seem to have been exhausted for now. The largest cryptocurrency in the market tumbles by over 11.2 percent in two days.

Bitcoin price trend was quite sluggish since 27th May and restrained below the $9,000 areas.

On the flip side, BitMEX posts the highest position for the BTC trading volume in the derivatives trading pair XBTUSD, which accounts for about 15.36% of the overall volume.

While the open interest for the bitcoin (BTC) futures at Chicago Mercantile Exchange’s (CME) is reportedly observed at an all-time high.

The number of open contracts Bitcoin futures for the week from May 27thto June 3rdis 5,190, according to CFTC (Commodity Futures Trading Commission).

While Coindesk also claims that this is the record highs of open positions that CME’s bitcoin futures have ever reported and a 7% increase over the previous week.

The increase in futures trading activity may be due to an indication of mounting institutional interest in bitcoin, as per their report. 

We infer it is wise to stay away from the underlying securities with lower volumes and lower open interest.

Usually, what happens is that the volume and open interests would be small at the early stages of futures contract life and expands as it reaches the maturity period and again drops during the close to expiration stage.

Hence, the buyer builds fresh longs and seller builds fresh shorts when OI increases. Here, in this case, it is good news for crypto-aspirants that new participants for bitcoin derivatives have been added.

Currency Strength Index: FxWirePro's hourly BTC spot index was at -139 (highly bearish), hourly USD is at -150 (which is highly bearish), while articulating (at 07:56 GMT).

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex