Bitcoin Futures Volume Increase Highlights Growing Institutional Interest

Futures volume and open interest skyrocketed on derivatives exchanges after the price of Bitcoin reached USD 11,700, highlighting the growing participation of institutional investors.

On October 12, the price of Bitcoin (BTC) exceeded USD 11,700 in Binance and data shows that trading in derivatives exchanges also began to increase.

According to Skew’s data, the open interest in CME’s Bitcoin futures began to recover. The term open interest refers to the total number of long and short contracts open at any given time and is typically used to measure trading activity in the futures market.

CME Bitcoin futures volume

Daily volume on other institution-focused platforms, including LMAX Digital and Bakkt, also remains high. This suggests that institutional volume is growing overall after the strong rebound in BTC.
What is behind this increase?

In the last two months, three multi-billion dollar conglomerates publicly announced significant investments in Bitcoin.

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First, MicroStrategy, a U.S. company listed on the Nasdaq, said it invested $425 million in Bitcoin. The company said it would treat BTC as its main treasury asset, essentially as a hedge against inflation.

Then, the $81 billion conglomerate, Square, followed with a $50 million investment. Square reportedly invested 1% of its portfolio in BTC, showing strength in its long-term growth.

On October 13, as reported by Cointelegraph, Stone Ridge, an asset manager worth $10 billion, bought 10,000 BTC. The company is now the third largest U.S. corporation to make a large investment in Bitcoin in the past two months.

Why was Bitcoin’s price virtually unaffected by Kucoin’s hacking or the legal actions against BitMEX?

After the high-profile investments in Bitcoin by MicroStrategy, Square and Stone Ridge, institutional demand for Bitcoin may be growing naturally. Skew researchers said:

„The open interest in #bitcoin futures from CME is recovering as the carry trade reopens. Look at this weekend’s TOC report to see if there are any more shortfalls in leveraged funds“.

Bitcoin’s futures data from Digital Assets Data also shows a noticeable increase in volume over the past 2 weeks.

BTC futures volume by exchange

CME’s open Bitcoin futures interest may have recovered after the September monthly maturity. Each monthly CME futures contract expires on the last Friday of each month. As the futures market resets after each expiration, the open interest falls with it in tandem.

Statistics suggest that an upward trend in Bitcoin similar to that of 2017 has begun

But the overall increase in volume on the various institutional platforms indicates that institutional demand is most likely growing.
Off-market agreements among whales may also be increasing

Since early October, Whalemap researchers said that off-trade agreements between whales have been increasing.

Whalemap, a platform that tracks whale activity and the operations of high-net-worth investors, found that in-person business increased markedly, especially before and after major announcements. They said:

„I was hoping to see more deals outside the market, and they did. I’m leaning more and more towards the idea that you can see these deals happening outside the network before the news is published.

In addition to the high institutional and whale activity, the overall volume of the spot market has been increasing simultaneously.

Aggregated daily BTC spot volumes

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During an uptrend, high spot volume is critical to maintaining upward momentum, as it shows genuine interest in Bitcoin from retail investors.