Bitcoin’s record ETF haul sparks $6.5bn trader frenzy on CME

Bitcoin reached $52,000 today off the back of strong spot exchange-traded fund inflows.

The move happened alongside an explosion of trading activity on derivatives exchanges like CME Group, analysts from crypto research firm K33 Research say.

Bullish outlook

BlackRock and Fidelity’s Bitcoin ETFs are making record-breaking hauls, and derivatives traders increasingly optimistic about Bitcoin’s path ahead, according to K33 Research.

CME open interest for Bitcoin futures increased 24% last week.

It is now back at $6.5 billion — the same level as when it peaked in the lead-up to the ETF approval before slumping as low as $4.5 billion.

“Market participants have re-entered the market, eyeing the strong momentum facilitated by the solid ETF flows, evident by the active market participant share on CME open interest rising from 46% to 55% over the past week,” K33 Research said.

Futures contracts allow traders to buy or sell assets for a predetermined price at a specified future date — hence the name.

Open interest reflects the total outstanding futures contracts held by market participants.

Futures on the CME are also trading 18% higher for Bitcoin and almost 17% higher for Ethereum compared to their spot prices.

“Flows have been hugely constructive, with traders expressing a bullish outlook,” the report said.

It’s not just CME: Offshore leveraged exposure is surging too.

Open interest in Bitcoin perpetual futures contracts reached almost $12.4 billion — a two-month high, K33 Research said.

Perpetual contracts, often referred to as perps, are a popular derivative contract predominantly used in crypto that have no settlement date.

The two biggest perpetual exchanges are Binance and Bybit, they have $6.1 billion and almost $4 billion in open interest, respectively.

However, the research firm noted that traders still disagree on which direction price will take in the short term.

K33 pointed to a market signal supporting this: Bitcoin funding rates are neutral.

The funding rate is a mechanism that helps a perpetual contract’s price and spot price converge over time.

A positive funding rate typically indicates that traders are long and expect the crypto asset to rise in the future, while a negative funding rate shows the opposite.

The combination of rising open interest with neutral funding rates may trigger liquidations in either direction, K33 Research warned.

Crypto market movers

• Bitcoin rose 6.6% in the last 24 hours and is trading for almost $52,000.
• Ethereum is up 5.3% in the same period, priced at $2,700.

What we’re reading

• A raid on Russian reserves would be good for Bitcoin — DL News
• Ripple Expands US Presence With Purchase Of NY Crypto Trust Firm — Milk Road
• Criminal sentencing of Binance founder CZ postponed to late April — CNBC
• How Decentralized Social Network Farcaster Hopes to Eventually Get to One Billion Users — Unchained
• Founders Fund Bets $200 Million On Bitcoin And Ethereum: Report — Milk Road
• Two booming DeFi protocols published similar code. Was it copied? — DL News

Tom Carreras is a markets correspondent at DL News. Got a tip? Reach out at tcarreras@dlnews.com