Bitcoin futures stores hum as the herd of bulls roams the crypto prairie. The markup update.
The Bitcoin share price (BTC) is taking a breather from the latest jump in the price and collapsing by 0.4 percent in a daily comparison. On a weekly basis, however, the crypto reserve currency still holds a respectable plus of 7.9 percent and was quoted at 11,442 US dollars at the time of going to press.
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The recent price increase has brought new momentum to derivatives trading. Open interest aggregated on all futures exchanges reached a monthly high of 4.3 billion US dollars on October 12. The open interest totals all futures contracts that have not yet been settled.
At $948 million, most of the outstanding contracts are on the Bitcoin exchange OKEx. Surprisingly, the second place was taken by BitMEX with a share of 593 million US dollars. After it was announced in early October that the Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice were investigating the exchange, large parts of the Bitcoin exchange reserves were withdrawn within a few days.
The aggregated daily volume of around 14 billion US dollars on October 12 also indicates lively trading activity on the futures exchanges.
As Datamish’s market analysis shows, very few traders are currently betting on a falling Bitcoin price. Currently, there are around 26,300 long positions against almost 3,400 short positions. Thus, 88 percent of all futures contracts are long positions.
Herd of bulls is growing
Companies and asset managers are taking over increasingly large Bitcoin market shares. According to Bitcointreasuries‘ analysis, the largest institutions‘ investments now amount to $6.4 billion with a current equivalent of over $6.8 billion.
The 10 listed companies and 5 asset managers account for 2.86 percent of the total circulating supply. Among the companies, MicroStrategy is the leader with a share of 38,250 Bitcoin.
The biggest whale, however, is still asset manager Grayscale, whose Bitcoin Trust (GBTC) currently holds almost 450,000 Bitcoin. Grayscale alone holds 2.14 percent of the Bitcoin circulation volume.
Bitcoin growth potential
However, as Ria Bhutoria states in the report Bitcoin Investment Thesis of Fidelity Digital Assets, the trend does not indicate a takeover of the market by institutional investors:
As more institutions accumulate Bitcoin, this investor segment will certainly have a greater impact on the Bitcoin markets. However, there is reason to believe that the influence of retail investors will continue.
The number of addresses containing 10 or less Bitcoin has risen steadily over the last few years.
According to the report, the simultaneous increase in the number of institutional and private investors is stabilizing the market. Because:
The behavior of private investors and institutional investors can be different, which could be another factor contributing to the fact that Bitcoin does not correlate with other assets, which are usually dominated by institutional sentiment.
The different investment strategies were therefore particularly impressive during the market crash in mid-March. While retail investors replenished the wallets at favorable conditions, institutional investors dumped their crypto assets. Thus small and large investors balance the market.
Bhutoria also attests the market great growth potential, basing this on an analysis by CAIA Association, according to which the total market capitalization for alternative asset classes amounts to 13.4 trillion US dollars.
If Bitcoin were to capture 5 percent of the alternative market, as measured by CAIA, this would represent an increase in market size of $670 billion. If Bitcoin captured 10 percent, its market size would increase by $1.3 trillion.
In the last scenario, the BTC market capitalization would increase to almost 1.5 trillion US dollars. With around 18.5 million Bitcoin currently in circulation, this would result in an exchange rate of 81,000 US dollars according to Adam Ries.