Summary
Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) has decreased by over $1 billion since January 10, while derivatives open interest on Deribit has increased, according to Deribit Chief Commercial Officer Luuk Strijers. Strijers suggests that the decline in CME open interest could indicate investors from traditional finance sectors shifting their investment strategies towards spot ETFs, which offer easier trading and lower costs compared to futures contracts. As the market approaches the end of January expiry date for outstanding options and futures contracts, Strijers notes that the market is recovering from the shocks of the ETF introduction and the GBTC unwind. He also highlights a decrease in the Deribit Volatility Index and the bitcoin annualized futures basis, suggesting a decline in volatility and a shift towards using options on Deribit for hedging and obtaining exposure.
Key Points
1. Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) has declined by more than $1 billion since its peak on Jan. 10, while derivatives open interest on Deribit has increased.
2. The declining trend in open interest on CME could suggest that investors, particularly those from traditional finance sectors, are shifting their investment strategies. The introduction of spot ETFs may provide a more straightforward and efficient way for these investors to gain exposure to cryptocurrencies.
3. The market for Bitcoin is becoming less volatile, as indicated by the decrease in the Deribit Volatility Index and the significant decline in the Bitcoin annualized futures basis. This stability could be attributed to the recovery from the initial shocks of the ETF introduction and the GBTC unwind.