Open interest in Bitcoin futures is at a 3-month high-but is that enough to overcome $50,000?

Bitcoin (Bitcoin) Open futures contracts have recovered to May levels, which has triggered optimism for a strong bullish break above $50,000.

On Monday, the total number of unexpired futures contracts on the Deribit exchange reached $1.37 billion, the highest level since May 27. At the same time, the difference between the Bitcoin spot exchange rate and its futures contract price widened, and its three-month basis (annualized) rose slightly. Data provided by Stack Funds showed that it returned to the June level.

Bitcoin futures OI and 3-month basis.Source: Stack Fund

The investment management company sees the recovery as a sign that investors are re-entering the Bitcoin market, while taking a “riskier approach.”According to Lennard Neo, its research director, the “futures premium trading” of Bitcoin futures reflects “investor sentiment is still biased towards bullishness.” wrote In a report:

“More importantly, we have observed that the bid momentum is in line with the bid, which leads us to believe that the market will be well supported at least in the short term and will be further consolidated before breaking through the $50,000.”

The impact of retail on bitcoin prices

In June, under the weight of the cruel sell-off in the world’s largest cryptocurrency spot market, Bitcoin futures collapsed. The downward trend from $41,322 to $28,800 eliminates basis trading, in which traders buy bitcoin in the spot market and sell long-term futures to lock in the difference between the two prices.

So it appeared, leveraged futures traders Unwind their long positions To meet the margin call requirement-that is, through the exchange’s automatic clearing mechanism.This narrowed the gap between the price of Bitcoin futures and the spot, and raised concerns about negative premiums on futures contracts, also known as Inverse spread.

On Deribit, the three-month benchmark (annualized) is approximately 2.5%. But in an ideal situation “Futures premiumIn this case, futures should be traded at an annualized premium of 5%-15% based on the stable currency loan interest rate.

telegraph Report The June decline has little to do with long-term liquidation, but has to do with the surrender of miners.It quotes Chinese Cracking down on regional crypto companies At about the same time, the price of Bitcoin plummeted and pointed out that the decision forced crypto miners to shut down operations abruptly, and then sold a large amount of their Bitcoin holdings to make up for their losses.

In June 2021, the Bitcoin spot exchange rate dropped by more than 30% in just 7 days. Source: TradingView

50,000 USD mental disorder

Entering August, Bitcoin has put aside most of the mining problems, Recent Glassnode reports indicate Miners have begun to accumulate tokens again. At the same time, the persistently high inflation report in the United States has also boosted Bitcoin’s risk aversion among qualified investors.

related: Bloomberg strategist for the 50th anniversary of the Bretton Woods system said that Bitcoin will replace gold

This partly explains why Bitcoin Bottomed and rebounded to around 29,000 USD and rebounded to 50,000 USD In more than a month. It also highlights the surge in open positions in futures and basis trading, indicating a renewed interest in buying by investors and traders.

But Neo discovered a potential malfunction. The researcher emphasized that Bitcoin has recently failed to close above the psychological resistance level of $50,000 and pointed out that it may prevent the upcoming rally. He added:

“The three-month basis did not exceed the level of June, and it is still far below the level of April. This fact shows that actual demand and speculation are still conservative.”

At the time of writing, Bitcoin is trading at $46,888, which is about 7.78% lower than its intraday high of $50,505.

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