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Bakkt Open Interest Breaks All-Time High as Bitcoin Price Slides

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Christine Vasileva | Dec 18, 2019 | 06:00

bakkt open interest hits all time high Bitcoin

Bakkt Open Interest Breaks All-Time High as Bitcoin Price Slides

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Christine Vasileva | Dec 18, 2019 | 06:00


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During the most recent slide in Bitcoin (BTC) prices, futures markets caught fire. The Bakkt physical delivery exchange has now reported a new record high in open interest on the platform.


Bakkt Open Interest Signals Rapid Funds Inflow

Bakkt futures allow for betting both on the upside and the downside of BTC. Now, a bearish trend ahead of the year end has reignited futures activity, with peak open interest. With a record number of contracts waiting for BTC price moves, signalling the entrance of new funds from both buyers and sellers.

For Bakkt, open interest does not signal actual BTC changing hands, as very few of the traders take physical delivery. But the potential for a decisive price move may make traders achieve gains on trading the actual contracts.

Open interest has been trending upward in December, coinciding with the breakdown of BTC prices and the opening of a clearer potential for a downward trend.

BTC Derivatives Gain Importance

For BTC spot traders, the futures market in a way “prints more BTC”, as anyone can open a position and later settle it, or roll it over, without owning physical BTC; unless of course they take physical bitcoin delivery from Bakkt.

But futures become even more active in the past year, leading to direct, short-term fight of bulls and bears. Actual BTC owners have taken away their coins, and flows to spot markets are slowing down in December.

As BTC looks set to slide further, bearish attitudes boost the interest in futures. The BitMex contract is also showing heightened activity, with almost no outflows.

Crypto-to-crypto exchanges post a much higher open interest, with BitMex at the lead with above $706 million, and OKEx also close to the top.

The bitcoin market also saw the arrival of options on futures, launched this December 9 for US traders. Bakkt also opened a cash-settled product, open on ICE Singapore from December 13. In 2020, the CME futures market is also expected to launch an options contract, adding another layer of price expectations without access to the underlying asset.

Bitcoin spot market has also expanded, but there is a shift in trading activity. BTC sees an outflow of Tether (USDT) activity, with the stablecoin moving to other asset markets. BTC spot volumes reached above $25 billion in 24 hours, while USDT volumes expanded to above $30 billion in 24 hours.

What do you think about Bakkt activity? Share your thoughts in the comments section below!


Images via Shutterstock, Twitter @mcasto_ @ecoinmetrics @skewdotcom

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