Open Interest on CME Bitcoin Futures Hits All-Time High, Signals Further Bullishness

As a seasoned crypto investor with a decade of experience under my belt, I find the recent surge in Bitcoin futures open interest on the CME exchange quite intriguing. Having witnessed two significant rallies in 2023 that coincided with similar spikes, I can’t help but feel a sense of deja vu.

The number of Bitcoin (BTC) futures contracts open on the Chicago Mercantile Exchange (CME) has reached an unprecedented peak of 172,430 BTC, equivalent to approximately $11.6 billion in value.

It was revealed on Tuesday by CoinDesk that the total cash-margin open interest has hit a record peak. Notably, about 40% of this total is attributed to CME (Chicago Mercantile Exchange). Open interest here refers to the count of active futures contracts being held at any specific moment in time.

Over the last five business days, the open interest for Bitcoin on CME has significantly increased by approximately 25,125 Bitcoins. In fact, this level is among the highest we’ve seen in recent times when considering five-day periods.

The last instance of such an accumulation occurred in June 2023 (with a total of 26,525 BTC), and it was around the same time that BlackRock applied for the spot bitcoin ETF, iShares Bitcoin Trust (IBIT). Over this span, Bitcoin experienced a significant increase, rising from approximately $25,000 to $30,000.

In October 2023, CME received an influx of 25,115 BTC, marking the first time it surpassed Binance as the leading futures exchange. During this same timeframe, from October through the end of the year, bitcoin’s value climbed substantially, rising from around $25,000 to over $40,000.

Additionally, Vetle Lunde, a senior analyst at K33 Research, highlighted this significant development and delved into the specific group responsible for this expansion in growth.

Lunde points out that the surge in growth on the CME is primarily being fueled by active and proactive traders, rather than futures-backed ETFs like the ProShares Bitcoin ETF (BITO).

The expansion is primarily fueled by the active involvement of market players, rather than investments into futures-backed Exchange Traded Funds (ETFs).

According to a graph by Lunde, the distribution of active Bitcoin positions on the Chicago Mercantile Exchange (CME) is as follows: At present, both active and direct participants collectively own approximately 85,623 BTC, which is comparable to the amount held in March when Bitcoin reached its peak value.

On the other hand, the 1 times leveraged ETF has consistently dropped this year, currently holding approximately 31,752 BTC. Conversely, the 2 times leveraged ETF, which spiked in March, has only witnessed minor growth since then. This pattern indicates that speculation and leverage played a significant role in the initial stages of the year, but they no longer seem to be the dominant factors shaping the current market.

Lunde points out that the structure of this activity revolves around the event of November expiration, which comes shortly after the U.S. election.