Bitcoin Futures Open Interest Hits 2023 High as BTC Trading Volume Hits Yearly Low – What’s Behind It?


Bitcoin traders have been struggling with the lack of a price surge above the $30,500 mark over the last four weeks. This has been accompanied by regulatory delays and reviews for exchange-traded spot Bitcoin funds (ETFs) requests. Despite this, there has been a noticeable increase in the open interest for Bitcoin’s futures contracts, indicating a rise in demand from institutional traders. However, activity in the derivatives market has been lackluster, leading to a mixed sentiment among investors and difficulty in gathering enough momentum to trade at or above the $31,000 level.

The United States Department of Justice considering fraud charges against Binance and the legal actions taken by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission against the exchange and its founder, Changpeng “CZ” Zhao, are thought to be the main factors for the lack of buyers. Additionally, the global economic effects of central banks attempting to manage inflation, such as the 1.4% decline in eurozone retail sales year-over-year in June and the U.S. ISM Manufacturing PMI registering at 46.4 in July, are also partially responsible for Bitcoin investors’ discomfort.

The futures market holds a great deal of significance in the trading landscape, as it includes cryptocurrency-exclusive exchanges and traditional financial platforms like the Chicago Mercantile Exchange. Futures contracts provide leverage and enable larger-scale investors to take part, with miners using them to mitigate risk. However, the data from CoinGlass and Coinalyze shows that the volume associated with Bitcoin futures has been declining since May 2022 and it has reached its lowest levels since December 2022, averaging below $7 billion per day. This suggests traders are either fully protected against risks or they have shifted their focus to other markets.

Until the ETF decision is confirmed and more defined rules for exchanges like Binance and Coinbase are established, traders using Bitcoin derivatives may not have much incentive to make more trades. These events, in addition to the uncertainty in the broader economy, could explain the reduced trading activities, despite more people being attentive to the situation and the price being stuck around $29,500.

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