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Home Cryptocurrency news Bitcoin

Bitcoin CME Open Interest Grows 3000% Since Start of May, But What’s Behind The Surge?

Tony Spilotro by Tony Spilotro
9 months ago
in Bitcoin
Reading Time: 3min read
bitcoin cme futures open interest
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Bitcoin futures open interest over at the Chicago Merchantile Exchange, better known as CME, has surged by 3,000% since the start of May 2020.

What’s fueling the sudden spike in interest in the first-ever cryptocurrency and can it continue into the future?

Bitcoin CME Futures Open Interest Grows By 3,000% in May 2020 Alone

The arrival of Bitcoin futures trading coinciding with a mainstream media blitz, retail FOMO, and the promise of free coins from a hard fork created the perfect storm for the first-ever cryptocurrency to reach its all-time high of $20,000 and put the asset class on the map.

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The Chicago Merchantile Exchange first listed its cash-settled Bitcoin futures product on December 18, 2017, marking the top of the rally and a record high that has never been retested even after nearly three years of price action.

Related Reading | Bullish For Crypto: CME Bitcoin Futures Open Interest Growth On Pace To Rival BitMEX 

CME Group’s Leo Melamed, a senior executive at the institution focused trading desk, claimed that its new product would “tame Bitcoin.”

Tame Bitcoin it did. Since its debut, Bitcoin price has been in a bear market since. Shortly after the debut, interest in futures began to dwindle, to the point where another major futures platform that helped inflate the 2017 bubble, the Chicago Board Options Exchange (CBOE) did away with the contract completely.

CME Group kept its running, and it has recently picked up in interest once again, surging by as much as 3,000% in May 2020 alone, according to data from Arcane Research in partnership with Skew analytics.

bitcoin cme open interest

Speculation Surges Amidst The Halving, But Lack Of Decision Keeps OI High

But why are CME traders suddenly showing such remarkable interest in Bitcoin again?

The surge occurring during the month of May 2020, almost certainly indicates that the boost in futures interest was driven by speculators positions themselves related to the halving.

It’s long been speculated that the halving would result in a powerful uptrend in Bitcoin, but a miner capitulation driven selloff couldn’t be ruled out.

A large move either way was expected, but thus far, Bitcoin price has mostly been trending sideways. Some industry experts called for such conditions, as the diminished supply was offset by an increase in miners selling.

Related Reading | Bitcoin Miner Capitulation Reaches Black Thursday Levels, Is A Severe Selloff Looming? 

It’s when miners are done capitulating that the network is then cleansed, and an uptrend can begin.

The lack of an explosive move to either side has left traders scratching their heads, and open interest piling on.

An eventual break will result in fireworks, according to volatility reaching historical lows as indicated by Bollinger Band Width and correlation metrics with the Nadsaq composite index.

When the break does occur, one side of the herd will get crushed, while the other’s profit. The resulting move, whatever it is, will hopefully be enough to keep open interest strong on CME thereafter.

Tags: bitcoinbtcusdBTCUSDTcem groupCME futurescryptoopen interestxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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