After trending downward this year, CME BTC futures open interest has risen 33% from Sep 7th–Oct 5th after slumping in the beginning of the year, according to Forbes.
Open interest refers to the total number of derivatives contracts that have yet to be settled for an asset. Open interest data can provide a way to assess derivatives trading activity. Additionally, open interest can be used to indicate trend strength — whether money is going to continue entering or exiting a particular market.
Positive growth in open interest tends to positively correlate with price increases, but does not directly drive them — bitcoin was up 280% last year, while Bitcoin futures OI was up about 97%. This year, bitcoin has been up 83%; meanwhile, Bitcoin futures OI was down about 17% for most of this year.
Additional data from Forbes shows that corporate hedgers have increased their purchases of Bitcoin futures, while commercial traders who decreased bitcoin holdings to buy ether have begun to buy back into bitcoin.
Although U.S. regulators have repeatedly stated an interest in ETFs holding Bitcoin futures, none have been approved. For investors looking to gain exposure to Bitcoin futures, the Bitcoin Strategy Profund (BTCFX) provides a familiar vehicle for doing so.
BTCFX launched in late July and has since seen steady growth. BTCFX primarily invests in Bitcoin futures traded on the CME, specifically “front month” futures contracts.
Front month contracts are contracts closest to their expiration date and are the most liquid type of futures contract, as well as the most closely linked to the underlying assets’ spot price. The fund does not hold bitcoin directly.
ProFunds affiliate ProShares is one of several issuers that has filed for a Bitcoin futures ETF with the SEC; however, the regulator has yet to make a decision on any of the 20 or so crypto asset products currently under review.
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