Bitcoin Futures Volumes Explode After Price Swing
The Bitcoin (BTC) futures market reawakened in early 2020, following more active price action on the spot markets. Across the board, leading futures trading platforms saw significant growth.
Bitcoin Futures Volumes and Open Interest Peak as Prices Move
Bitcoin futures bet on the price direction, and open interest as well as trades increased with the promise of higher volatility.
Serious bitcoin futures volumes yesterday – $20bln+ on our radar (not an exhaustive count) pic.twitter.com/6kCSFRq6cy
— skew (@skewdotcom) January 9, 2020
Once again, crypto-to-crypto exchanges held the lead when it comes to futures trading. OKEx and Huobi remained at the top, with BitMex the other big influence on the futures markets.
Bakkt Open Interest Breaks Record
Bakkt futures remain relatively slim in comparison to the other markets, but are seen as a sign of mainstream adoption. Bakkt futures also post growing volumes, with a pickup in activity in the past few days.
Wednesday's Bakkt Bitcoin Monthly Futures:
📉 Traded contracts: 4107 ($32.59 million, -15%)
🚀 All time high: 6601 (12/18/2019)
💰 Open interest: $9.53 million (+45%)
— Bakkt Volume Bot (@BakktBot) January 9, 2020
Bakkt volumes picked up significantly with the bitcoin price action, but are on the retreat now. The recent bull rally saw open interest close in on all-time high figures.
Bitcoin poses unique challenges on the futures markets, as price swings are highly unpredictable. This leads to sudden liquidations that erase positions, especially during attempted shorting. The recent sudden spike of hundreds of dollars was enough to liquidate short positions.
Futures are also viewed as holding the potential to predict bitcoin price moves. So-called gaps, or bets outside the continuous range of BTC prices, are viewed as potential target levels. It is uncertain if gaps can lead to price pressures, but currently, CME futures suggest bitcoin may take a hike down before appreciating again.
#Bitcoin There are gaps in the charts of Bitcoin CME Futures . These gaps are often closed later and offer ideal correction targets. They can even help to show where a low point could be.
Currently we see a target at 7680 down and 11195 up.
So, down first and then up.
— RJ (@RJuninger) January 8, 2020
Added to the futures market activity, in the coming days, the CME will also contribute with the launch of the options market.
Bitcoin price is still above the $7,900 support level, which was established as one of the strong positions to be defended. However, the predictions see another dip in prices, before a new leg up eventually. BTC traded at $7,39.97 on Thursday, as spot volumes slowly diminished to around $26 billion in the past 24 hours.
Bitcoin futures remain a much riskier game in comparison to spot markets. Spot markets still require actual whales to move prices, while futures offer an outright bet on which direction BTC would take. Bakkt futures also reveal there are very few physical deliveries, and positions are being rolled forward or traded.
What do you think about BTC futures activity? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter @RJuninger @BakktBot @skewdotcom