Bitcoin Open Interest at Yearly Highs

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Open Interest (OI) on Bitcoin represents derivative contracts such as futures and options that have not yet closed at a specific time.

In other words, it is the sum of all long or short positions open at a given time.

As it adds up long (optimistic) and short (pessimistic) positions, it is not useful for trying to guess future price trends, but it is a good indicator of the volume of trading activity.

Open Interest on Bitcoin

CoinGlass collects OI from different platforms where derivatives are traded and adds them up.

At present, the total open interest on Bitcoin derivatives is said to be over $14 billion.

It should be noted that the crypto exchange with the largest OI on Bitcoin is Binance, with a share well below 50% (32%), but almost double that of CME.

The CME (Chicago Mercantile Exchange) is the world’s largest derivatives exchange, but it only accounts for 18% of all open interest in Bitcoin despite this.

Additionally, the third largest is the Bybit crypto exchange, with only a slightly lower share.

Thus, the $4.65 billion in Bitcoin OI on Binance is a more than remarkable figure, even though it is only 32% of the total.

The Rise of Open Interest on Bitcoin

It should be noted that the OI on Bitcoin has increased significantly in recent weeks.

In fact, as of March 18, it had always been more or less above $10 billion, but from June 16, it started to increase significantly.

However, something like this had already happened between April 5 and April 14, but it only went up to 13 billion.

Therefore, the current level is the maximum level in 2023.

To find the last time it exceeded $14 billion, you have to go back to May 9, 2022, before the Terra/Luna ecosystem imploded.

This means that from this point of view all the losses of the last year due to this same implosion have been recovered.

The comparison with altcoins

The comparison with altcoins from this point of view is merciless.

Only Ethereum holds up somewhat, with $5.77 billion in OI, which isn’t much more than the OI on Bitcoin on Binance alone. In fact, the OI on ETH on Binance is less than $2 billion, less than half that on Bitcoin.

Even in the case of Ethereum, Bybit is ranked third, with OKX in second place.

CME is actually only sixth for OI on ETH, with just $0.36 billion.

This likely means that traditional investors are much less likely to bet on altcoins than Bitcoin.

There is no other cryptocurrency with over a billion OIs in total, and indeed only XRP exceeds half a billion.

Aggregating the Open Interest of all altcoins except Ethereum, they struggle to reach $4 billion, which is less than the Open Interest on ETH alone, and even less than the OI on Bitcoin alone on Binance.

In other words, while Bitcoin’s dominance in the crypto markets in terms of market capitalization is around 50%, in the derivatives market in terms of open interest it is around 60%. And all this without traditional exchanges playing a significant role.

The volume trend

It should be noted that daily trading volumes of derivatives contracts are just under three times open interest, which is at higher levels than spot trades.

Taking Binance as a benchmark, daily crypto derivatives trading volume turns out to be just under $40 billion, while spot trading across all cryptocurrencies turns out to be less than $9 billion. of dollars.

This means that at present, traders prefer to trade derivatives such as futures or options rather than spot cryptocurrencies.

Generally, professional traders prefer derivatives the most, while small retail investors prefer cash markets. This seems to indicate that at present it is mainly professional traders who operate in this market.

Again, traders only come in droves when there is hype, often at the peak of the speculative bubble, while professionals tend to stay there all the time.

Moreover, the current volumes are far from being records, so much so that they are, for example, lower than those at the end of April.

Long or short

Currently, the long/short ratio is slightly skewed in favor of long positions.

The difference is small, but it indicates that, overall, the markets look slightly bullish in the short term.

It is important to remember that derivative contracts can expire, so the long/short ratio can also change quite quickly.

In essence, crypto derivatives markets have fully recovered from the 2022 bear market, so much so that they are showing slight signs of optimism.

However, these are still very volatile markets that can change sentiment very quickly.

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