Bitcoin Futures Interest Soars as Bond Yields Fall to Record Lows: Industry Exec

Surging open interest in crypto derivatives suggests investors are seeking alpha in other investments, like bitcoin, said the co-founder of an index fund provider.

AccessTimeIconAug 4, 2020 at 12:20 p.m. UTC
Updated Sep 14, 2021 at 9:39 a.m. UTC

Bitcoin futures are drawing record interest as investment opportunities in traditional markets dry up, said the co-founder of an institutional fund provider.

  • Open interest, or open positions, in futures listed on major exchanges reached a new lifetime high of $5.6 billion on Saturday, surpassing the previous record of $5.36 billion in February, according to data source Skew
  • As of Monday, aggregate open interest was $5 billion, up 66% from the July low of $3 billion.
  • Open interest in futures on the Chicago Mercantile Exchange (CME), synonymous with institutional investors, jumped to a record high of $828 million on Monday.
  • CME's open interest has surged 127% over the past 2.5 weeks alongside bitcoin's quick rise from $9,100 to $11,100.
  • “The rise in open interest represents an accumulation of long positions by institutional traders,” said Matthew Dibb, the co-founder and COO of Stack, an institutional provider of cryptocurrency trackers and index funds.
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CME open interest

  • Dibb said the rise in open interest in crypto derivatives suggests investors are looking for alpha – the best returns – in alternative markets as equities look overbought and bond yields move into negative territory.
  • The U.S. 10-year Treasury note is offering a yield of 0.54% at press time with the real or inflation-adjusted bill at a record low of -1%.
  • Similar bonds in Germany, Japan and Switzerland are offering negative yields, according to TradingView data.
  • As a potential macro hedge, Dibb expects bitcoin to break into multi-year highs as the global economy worsens and investors become steadily confident in moving value from traditional markets into the digital asset space.
  • Bitcoin's price is largely unchanged at $11,290; technical bias remains bullish with prices holding well above the support line at $10,500, the February high.

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