Open interest in CME BTC futures collapses to its lowest value in six months

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The total volume of capitals placed in bitcoin futures of the Chicago Mercantile Exchange (CME) hit a half-year low on Wednesday, CoinDesk notes. Open interest fell to $ 1.36 billion, the lowest level since December 16. Compared to mid-April, the indicator has fallen by more than two times. The number of active positions has also dropped by 22% in recent weeks.


“CME has been a favorite place for institutions to hedge positions in the Grayscale Bitcoin Trust (GBTC),” said Amber Group. “However, since the GBTC premium disappeared, the incentive for such investments has dropped.”


Accredited investors open positions in GBTC at net asset value, but they can get rid of them only after six months. Until February, GBTC shares were trading at an overpayment of several tens of percent, which allowed such investors to take advantage of the lucrative arbitrage opportunity. At the same time, they hedged their GBTC positions with CME futures to earn a premium, but not lose money due to Bitcoin price fluctuations.

Such transactions lost their meaning in February, when the overpayment went into a discount. For several months, the sale of GBTC shares on the secondary market has been carried out at a discount relative to the price of bitcoin. In addition, the market crash in May led to the closure of a large volume of bullish positions on the CME and other exchanges.

The total volume of capital placed in bitcoin futures across all platforms is now $ 11.9 billion, up from $ 19 billion a month ago. Open interest is expected to remain subdued in the near future as futures overpayment has also declined relative to the bitcoin spot price. making arbitrage between the two markets less attractive. On average, its size fell from 12% in mid-April to the current 3%, and on Binance – from 42% to 8%.


“The recent crash has lowered profitability in the ecosystem,” said Raul Rai, managing partner at Gamma Point Capital. “As a result, arbitrage has become less attractive, and the demand for institutional investors to short futures against long positions in the spot market has fallen.”


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