Bitcoin Futures' Open Interest Drops More Than Half in 2 Months

The Arcane Research report says this downward trading indicates institutional investors are being “cautious” at the moment.

AccessTimeIconJun 22, 2021 at 6:25 p.m. UTC
Updated Mar 6, 2023 at 3:29 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The total open interest in the bitcoin futures market is sitting at $11.3 billion, down 59% from its April 13 peak of $27.3 billion according to Arcane Research

The report said the downward trading indicates that institutional investors are being “cautious” at the moment. It also notes that three-month futures in bitcoin are in backwardation, meaning they are traded at a discount to current spot prices. That is generally perceived to be a bearish signal. 

Open interest on the Chicago Mercantile Exchange (CME) as a share of total bitcoin futures was climbing at the end of May, but is now trading downward. The CME's open interest is currently sitting at 12.2% of the bitcoin futures market, according to the report. That puts it in fourth place, behind retail platforms Binance (22.5% of total open interest), OKEx (14%) and Bybit (12.9%).

“I think it’s safe to say that institutional interest has waned,” said Nathan Cox, chief investment officer at Two Prime. Cox said that institutions remain “hungry” for crypto as a whole, but their ability to step in is limited by the recent volatility in the market. 

Meanwhile, some note the decline in futures activity indicates that other market participants are also stepping back. 

“What this shows is a lot of retail traders got burned when the market started to come lower,” said Patrick Heusser, head of trading at Crypto Finance AG.

Nonetheless, Two Prime’s Cox remains optimistic that larger investors will buy the dip. 

“As things stabilize I would expect to see large institutions announce positions, likely being accumulated into this pullback,” he said. 

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.