CME Bitcoin Futures Contracts Open Interest Hits Record High

Open interest in the Chicago Mercantile Exchange’s (CME) Bitcoin Futures contracts hit a record high last week.

According to data released by the Commodity Futures Trading Commission (CFTC), open interest in CME bitcoin futures reached a total figure of 5,190 during the period between May 23 and June 3.

This is the highest number ever posted for open interest, or contracts outstanding, in CME bitcoin futures ever. It also represents a gain of seven percent compared to the previous week.

The last day of trading on the CME futures markets was on May 31. Contract settlements came next, which took place on Monday.

Pundits believe the sharp increase in futures trading activity could be a sign heralding increased institutional participation in cryptocurrency markets.

Futures were first listed at the height of the bull market in December 2017. Trading activity, however, was adversely affected by the crypto winter throughout 2018.

Filling the gap

The gaps shown on the CME bitcoin futures daily chart for May 17 and May 31 show how bitcoin futures typically fill a gap created by the trading period’s closure at the end of the week and its resumption on the following Monday.

When there is a large demand in futures contracts, the gaps that appear from the time of close to when trading resumes again also become bigger. This may lead to a greater drawdown once prices stabilize.

On May 17, for example, bitcoin’s spot price dropped to as low as $6,600. Greater buying pressure, however, managed to push prices beyond $7,300, completing the 11.74 percent gap seen four days prior in the futures market.

This happened again on May 31. Bitcoin’s price fell 11 percent from as high as $9,090 to below $8,000. The price then pushed back up to above $8,200 within an hour to complete the 5.5 percent gap left four days prior in the futures market.

The data collected by the CFTC also showed open interest in short positions at 85.1 percent compared to 62.9 percent for bitcoin longs. This may be seen as a hint that a price pullback is possible in the short-term as investors prepare for a downward trend in bitcoin prices.