Open interest in BTC futures close to record high in November 2021

Open Interest (Open Interest) futures trading on bitcoin (BTC) exceeded $21 billion. And is approaching the record of $24 billion, recorded in mid-November 2021. And when bitcoin cost $65 thousand, writes CoinDesk with reference to data from the analytical service Coinglass.

In traditional trading under the open interest (Open Interest) is understood as the total number of purchase orders. Which are available at the time of market opening. In futures and options trading, Open Interest is the total number of contracts outstanding at a given point in time. This includes futures contracts that have not yet been exercised, have not yet expired, or have not been settled by delivery of the underlying assets.

Open interest serves as a metric for assessing the level of involvement of market participants in a particular futures contract. An active growth in open interest combined with an increase in the price of the asset may indicate an active upward movement.

The rise in interest in futures has coincided with the BTC price rising more than 25% over the past three weeks. And driven mainly by large-scale investments in spot bitcoin ETFs in the US.

The overall credit load in the market remains low. And that reduces the risk of price collapse and high volatility due to forced closure of long or short positions due to lack of collateral. According to CryptoQuant, bitcoin’s leverage ratio recently increased slightly from 0.18 to 0.20, but is still far from last year’s levels.

Our experts note that  Open interest in bitcoin-denominated futures currently stands at 430,500 bitcoins. And that is well below the October 2022 peak of 660,000 bitcoins, according to CoinGlass data.

Our experts talked about the sources of new capital in the cryptocurrency market. And the trends shaping the demand for cryptocurrency

The interest of users in the cryptocurrency market and the demand for cryptoassets are driven by both global expected events and new trends. Our experts told us what exactly could trigger capital inflows into bitcoin and other cryptocurrencies in 2024.

Halving and new highs

In 2024, one of the most anticipated events for the crypto industry will take place – bitcoin halving. This term refers to the halving of payments to miners – members of the cryptocommunity who mine cryptocurrency.

Halving is a planned halving of the number of newly issued bitcoins that are created and distributed to miners who perform verification and validation of transactions on the network. The procedure is embedded in bitcoin’s program code to ensure that the total number of coins in the network never exceeds 21 million units.

Bitcoin halving occurs about once every four years. The event reduces the inflow of coins to the market by half. But the demand for them at the same time remains unchanged. As a result, there is a shortage of bitcoins, which pushes the cryptocurrency’s rate up. Statistics show that bitcoin updates the absolute maximum value about a year and a half after halving. That is, theoretically, the new peak of the rate will be reached in 2025.

But there are speculations according to which the maximum, contrary to history, can also be registered in 2024. The reason is the likely launch of spot bitcoin-ETFs in the US. The battle of market participants for the approval of the instrument has been going on since 2013. With its appearance, institutional investors’ money may flow into the crypto industry.

New capital sources

The year 2024 has several prerequisites to become favorable for the cryptocurrency market. First, investors are full of positive expectations due to hopes of approval of a bitcoin-ETF by the U.S. Securities and Exchange Commission (SEC). Market participants expect the emergence of a bitcoin-linked exchange traded fund. And that will push asset managers from the world of traditional finance to embrace cryptocurrencies as another tool to diversify portfolios. This will encourage capital to flow into the cryptocurrency market.

Secondly, we can expect to see continued growth in interest in Ordinals, which are now available not only on the bitcoin network. But also in other blockchains. This gaining popularity, which was born in the bitcoin blockchain, is now spreading to other networks as well.

The interest in the new standard also facilitates the flow of capital into the crypto market and contributes to its growth. Above all, the positive impact stimulates interest in bitcoin. And whose blockchain has become the progenitor of the “ordinals”.

The year 2024 could also be a watershed year for the NFT market as a whole. And which has long been dominated by networks such as Ethereum or Solana. In November 2023, the volume of NFT trades in the bitcoin network exceeded that of Ethereum. And this was made possible by the emergence of Ordinals. This will probably be one of the major trends for the NFT market in 2024 – the flow of capital and users to the bitcoin network.

The third trend in 2024 will be the boom of ecosystems and so-called Layer 2 applications. These are focused on infrastructure creation and development of blockchain tokenomics. It is worth paying attention to the DePIN concept. The emergence of new concepts and applications like these. It could help stimulate adoption and demand for cryptocurrency by a wide range of users.

Two exchange traded ETF funds raised a total of $73.6 million on the eve of their debut on Hong Kong Stock Exchange. Crypto-Upvotes expert review

Two exchange-traded funds (ETF) will begin trading on the Hong Kong Stock Exchange (HKEX) on December 16. They are based on cryptocurrency futures. These are the first funds of their kind in Hong Kong. CSOP Asset Management’s ETF invest in Bitcoin and Ethereum futures. Which are listed on the Chicago Mercantile Exchange (CME Group) in the United States. They are the only cryptocurrency assets allowed by the Hong Kong Securities and Futures Commission (SFC).

Two funds raised a total of $73.6 million before their debut on the Hong Kong Stock Exchange. The larger one, CSOP Bitcoin Futures ETF (3066.HK), raised $53.9 million, according to the management company. That’s more than the ProShares Bitcoin Strategy ETF, the first U.S. Bitcoin futures ETF. Which began trading on the New York Stock Exchange (NYSE) in October 2021 with an initial capital of $20 million.

Crypto-futures ETF demonstrate that Hong Kong remains open-minded about the development of virtual assets. This is despite recent problems in crypto-industry, said Yi Wang, head of quantitative investment at CSOP. He noted that since ETF do not invest directly in Bitcoin and are traded on regulated exchanges in the U.S. and Hong Kong. Investors will have more regulatory protections than tokens traded on unregulated platforms.

The first futures-based Bitcoin-ETF were approved in the U.S. back in 2021. However, the U.S. Securities and Exchange Commission (SEC) has so far rejected all applications to launch a spot exchange-traded fund (ETF). SEC head Gary Gensler attributed this to the fact that applications for such funds do not meet the Securities Act’s standards for cracking down on fraudulent or manipulative practices.