The trading volume of Bakkt’s Bitocin Monthly Futures contracts has hit a new all-time high close to the $150 million mark on August 25, as institutional interest in the cryptocurrency space keeps growing.
According to a Twitter bot tracking the performance the Intercontinental Exchange’s (ICE) cryptocurrency venture, open interest dropped by 10% to $9.4 million while the volume of contracts being traded hit $147.7 million.
Bakkt’s bitcoin futures contracts are physically-settled, meaning that on their delivery that actual bitcoin is delivered. The platform’s trading volume has been rising at a time in which the price of bitcoin is managing to remain above the $11,000 mark, after being rejected at $12,000.
This year BTC dropped to a low below $3,000 back in March, after all three major U.S. stock market indices entered bear market territory and the World Health Organization declare the COVID-19 outbreak a pandemic. BTC then recovered to $9,000 and was range-bound around that area before breaking into five-figure territory, CryptoCompare data shows.
The flagship cryptocurrency has been becoming an increasingly interest asset to investors, as the COVID-19 pandemic’s effects on the economy triggered a governmental response that included quantitative easing (QE), sparking inflation-related fears.
Various companies and investors have since moved to gold and BTC to hedge against inflation. The precious metal surpassed $2,000 for the first time ever earlier this year, while bitcoin has been receiving investments from high-profile entities. These include billion-dollar business intelligence software firm MicroStrategy, which made a $250 billion bet on BTC.
On social media Messari analyst Ryan Watkins pointed out that CME Bitocin Futures contracts have also seen their open interest it a new all-time high.
Open interest is the total number of outstanding derivatives contracts that have not yet been settled. While Bakkt’s contracts were launched rather recently, the CME’s Bitcoin Futures contracts wee launched in December 2017.
Cryptocurrency Derivatives
While in the U.S., CME and Bakkt are two top trading platforms trading bitcoin derivatives, there are numerous platforms in the cryptocurrency space offering similar contracts for BTC and multiple other cryptoassets, including ETH, XRP, EOS, and LINK.
While it’s more likely institutional investors are trading on platforms like Bakkt, the trading volumes of platforms like cryptocurrency exchange OKEx cannot be discounted. CryptoCompare’s July 2020 Exchange Review shows the platform traded over $100 billion that month, after seeing its volume rise 17.7%.
OKEx offers traders various futures trading pairs and expanded its derivatives offering last month adding DOTUSDT and FILUSDT perpetual swaps, shortly after adding DOGE margin trading and savings accounts.
Perpetual swaps, it’s worth noting, are a type of derivative with no expiry date. When traders open a perpetual swap trade they bet on whether the value of a cryptoasset will rise or fall, and may have to pay funding fees. The contract itself does not expire.
Options, a financial derivative giving contract buyers the opportunity but not the obligation to buy or sell the underlying asset, are also widely available across cryptoasset exchanges. In a Medium post, OKEx even revealed it added three more expiration dates to its options trading: daily, two-day and monthly.
The most popular cryptocurrency derivatives contracts, on OKEx and other platforms, are bitcoin perpetual swaps, and bitcoin futures contracts.
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