The launch of the spot Bitcoin ETFs in the U.S. marked a watershed moment in the crypto industry. While the impact it could have on the global Bitcoin market, like legitimizing it as an asset class or creating more demand, has been analyzed at length, few have focused on its effects on other regulated investment products like futures.
As a spot Bitcoin ETF offers a more direct investment road to cryptocurrencies, it’s important to examine how it influences the Bitcoin futures market. The relationship between these two investment vehicles shows investor sentiment and market trends, and the impact regulation has on crypto trading.
From Jan. 9 to Jan. 15, there was a noticeable decline in the total open interest across all exchanges, decreasing from $17.621 billion to $16.201 billion. This 8.05% drop suggests a reduction in the number of open futures contracts, hinting at either a diminished interest in futures trading or a possible reallocation of investments to other vehicles, such as the spot ETFs, which began trading on Jan. 11.
Most exchanges offering futures and other derivatives saw similar drops in open interest. However, CME stands as an outlier, the exchange that suffered the most significant decrease in open interest and trading volume.
Beginning at 26,846 BTC on Jan. 9, open interest on CME Bitcoin futures increased slightly to 27,252 BTC on Jan. 10, a modest increase of 1.51%, before entering a decline. By Jan. 12, the open interest had fallen to 23,992 BTC, marking a significant reduction of 10.64% from its highest point on Jan. 10.
This decrease in open interest, particularly notable between Jan. 11 and Jan. 12, coincides with a considerable drop in Bitcoin’s price during the first day of spot Bitcoin ETF trading. This suggests a correlation between the declining market confidence in Bitcoin’s future price and the reduced interest in futures contracts.
The trading volume of CME Bitcoin futures showed even more volatility. After an initial volume of 16,821 BTC on Jan. 9, it peaked on Jan. 11 with 31,681 BTC, a substantial increase of 88.33%. However, this peak was short-lived; following the sharp decline in Bitcoin’s price, the futures trading volume fell to 22,699 BTC by Jan. 12, a decrease of 28.34% from the previous day’s peak.
Click Here to Read the Full Original Article at Bitcoin (BTC) News | CryptoSlate…
