The Kobeissi Letter reported that Open Interest in Bitcoin futures contracts on the CME hit a record of 51,000. According to the market analyst, CME’s surge in open interest in Bitcoin futures coincided with the launch of spot Bitcoin ETFs last year.
The Kobeissi Letter revealed that Open Interest(OI) in Bitcoin futures contracts on the Chicago Mercantile Exchange(CME) had recorded an all time high of 51,000. The analyst highlighted the number of active positions that had risen fivefold since the beginning of 2024.
#Bitcoin trading activity has never been greater:
Open interest in Bitcoin futures contracts on CME is now at a record 51,000.
The number of active positions held by market participants has risen 5 TIMES since the beginning of 2024.
This coincided with the launch of spot… pic.twitter.com/6z1sdTqoqU
— The Kobeissi Letter (@KobeissiLetter) January 8, 2025
BTC futures open interest on CME hits all-time high
Kobeissi Letter noted the increased active positions held by market participants coincided with spot Bitcoin ETFs launched on January 2024. The company indicated that spot BTC ETFs were primary drivers behind the current all-time high.
Kobeissi Letter speculated that spot ETFs, unlike futures-based ETFs, provide investors with direct exposure to Bitcoin. It also pointed out that since spot ETFs started trading, Bitcoin funds have attracted $44 billion in cumulative inflows.
According to Glassnode, more Bitcoin futures contracts are cash-margined than crypto-margined, indicating they are pegged on the US dollar, not cryptocurrencies. The Chicago Mercantile Exchange (CME) is reportedly the largest player, with over 40% of all cash-margined contracts.
CME Open Interest reached new notional all-time highs yesterday of 172,430 BTC!
The prevailing institutional bias is building long exposure. Alongside the wild surge in open interest, futures premiums have climbed to 5-month highs. pic.twitter.com/I1Q5iT8hZn
— Vetle Lunde (@VetleLunde) October 16, 2024
In October 2024, Vetle Lunde, senior analyst at K33 Research, commented on the back-to-back all-time highs in CME Open Interest throughout the year and pointed out various drivers of its growth.
He suggested that active and direct market participants are driving the surge rather than speculation. Lunde pointed out that inflows from futures-based ETFs such as ProShares Bitcoin ETF (BITO) were also minimal and could not have led to the surge.
The analyst provided a breakdown of open interest by cohort on the CME, pointing out that active and direct participants held over 85,000 BTC. Lunde highlighted that this amount was equal to what was held in March 2024.
However, he pointed out that the 1x leveraged ETF declined throughout 2024 and held 31,752 BTC. Lunde also added that the 2x leveraged ETF has only recorded slight growth since March, indicating that leverage is no longer a growth catalyst in the current market.
Bitcoin outperforms all other assets in 2024
According to Coinmarketcap, Bitcoin recorded an over 120% surge in 2024 amid developments in the cryptocurrency ecosystem, such as the approval of spot Bitcoin exchange-traded funds. Kobeissi Letter commented that BTC outperformed all other asset classes in 2024. Bloomberg also reported that BTC outperformed assets such as Cocoa, global equities, and gold in the past year.
Coinmarketcap reported that in mid-December, BTC recorded an all-time high of $108,315 following President-elect Donald Trump’s victory. The surge was reportedly fueled by investor optimism since the presidential candidate had signaled that he would implement crypto-friendly policies once he assumed office. However, the price of digital assets eased after the Federal Reserve chair, Jerome Powell, announced that rate cuts would roll out slower than anticipated.
The digital asset has since maintained its set wall between $99,700 and $100,000. However, as of the time of writing, BTC traded at $94,099, a 2% decline in 24 hours. According to CoinGlass, Bitcoin clearing the $99,000 mark could cause large-scale liquidations, leading to a surge in spot price.
Despite the market optimism, market players such as Peter Hughes, founder of Evolve Investing, warned investors against the volatility risks presented by Bitcoin. QCP Capital, in its note to its clients, also expressed its belief that the catalyst may come after institutions readjust asset allocation.
