The open interest in Bitcoin futures on the Chicago Mercantile Exchange (CME) has experienced a significant spike, reaching $5.09 billion from $2.20 billion just a month ago, as reported by Glassnode. This surge in open interest can be attributed to the ongoing upward trend of Bitcoin, which recently reached a new yearly high of $44,400. It appears that this upward momentum may continue, according to analysis from industry experts.
Renewed Interest from Traditional Finance Institutions
“The futures positioning on CME shows Bitcoin could still move higher from its current price, what is not clear is whether we moved from a net short positioning from last week to net long. We are interpreting this as a signal that traditional finance institutions are now slowly showing a renewed appetite for crypto products,” says Laurent Kssis, a crypto expert on trading and ETFs at CEC Capital.
Kssis further explains that institutions may be positioning themselves ahead of a U.S. Securities and Exchange Commission (SEC) decision regarding the approval of a spot exchange-traded fund (ETF). He believes that such approval would lead to a rapid short-term upward price movement for Bitcoin, which is already being witnessed in the market.
Potential Price Volatility Ahead
In related news, the U.S. SEC has recently announced the postponement of its decision on Grayscale’s application for a spot Ethereum ETF. The review period has been extended, and the new deadline is now set for January 2024. Kssis cautions that despite the current price surge from $41,000 to $44,000, significant profit-taking could take place, potentially leading to a decline in Bitcoin’s value to around $39,000 in the mid-term. He also warns of a possible “sell the news” event occurring in the coming days and weeks.
With the CME Bitcoin open interest reaching an all-time high, many are anticipating an improvement in microeconomic sentiments and are expecting a rate cut, which could further drive the price action.
