Bitcoin Futures Expiration, Soaring Open Interest Could Signal Major Move Ahead

Tony "The Bull" Severino

5 years ago

3 mins read

bitcoin cme futures bitmex open interest crypto

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The institutional traders on CME Group’s Bitcoin futures trading desk and the retail traders and crypto whales trading on BitMEX often dominate the market and dictate where the market goes next.

With Bitcoin futures contract expiry coming up this Friday, and with BitMEX open interest soaring to new highs every hour, an incredibly massive and volatile move is expected in Bitcoin markets in the coming days.

Volatility Inbound: BitMEX Open Interest Soars Ahead of CME Bitcoin Futures Expiration

Crypto traders and analysts will consider any and all information and data they can get their hands on that might give them a read on the market and a competitive edge.

They regularly conduct detailed fundamental analysis including stock-to-flow models, review hash rate growth, dormant Bitcoin addresses, and more.

They’ll also perform regular technical analysis using a variety of chart patterns, candlestick formation techniques, and indicators and oscillators to help them in their analysis.

Oftentimes, analysts will even rely on more unorthodox information, such as open interest on the margin trading platform BitMEX, or when futures contracts expire on the Chicago Mercantile Exchange trading desk.

CME contracts expiring often lead to a massive increase in relative volatility, and explosive price movements in the days leading up to and following expiry.

And each time open interest on BitMEX gets above $1 billion dollars or over 100K BTC, it typically results in a large rally or sizable drop.

https://twitter.com/JacobCanfield/status/1222142225133514753?s=19

Now, the two possible volatility triggers are coinciding and converging this week, suggesting one of the biggest moves the crypto space has ever seen may be in the cards.

When looking at the past performance of open interest, each time open interest reaches over 100K BTC or over $1 billion, the metric gets rejected, a large move results and open interest drops back down, only to build up again at a later date for another big move.

Open interest accounts for all of the currently open positions on the platform BitMEX – which dominates the cryptocurrency market by trading volume and impact.

The metric has reached $950 million and is approaching the important billion figure, and is also over 100K BTC. The surge in open interest almost guarantees an explosive burst of volatility in the coming days.

Coupled with CME futures expiration coming this Friday, there could be fireworks and the largest move in the crypto market in some time.

As can be seen in the chart above and indicated by Bollinger Band Width, leading up to each CME futures expiration causes an uptick in volatility.

Related Reading | Bitcoin is Officially About To Enter a Bull Market

A large move typically precedes or follows expiration before volatility dwindles again and the cycle repeats. According to the increase or decline following each expiration, there is no rhyme or reason to which direction Bitcoin takes.

However, which direction Bitcoin takes at this point is likely to dictate the trend for the foreseeable future, and is an especially critical moment for the crypto space.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.