Bitcoin derivatives have reached new heights as open interest (OI) in Bitcoin futures hit an all-time high of $40.5 billion on October 21, according to a report from CoinGlass.
Data shows that the Chicago Mercantile Exchange (CME) holds the largest share of Bitcoin futures open interest, accounting for 30.7%.
This is followed by Binance, with 20.4%, and Bybit, with 15%.
Bitcoin Reaches $70,000 Mark
The surge in open interest coincided with Bitcoin’s price approaching the $70,000 mark.
Open interest refers to the total value or number of outstanding futures contracts that have not yet expired.
It serves as a key indicator of market activity and investor engagement in Bitcoin derivatives.
A rise in OI can signal increased leverage in the system, potentially leading to greater market volatility.
Periods of high open interest can lead to significant market movements, particularly when prices shift sharply.
#Bitcoin open interest exceeds $40 billion for the first time.
https://t.co/b1RbJ1A35P https://t.co/O2On2tpEQj pic.twitter.com/hS0p3ZBE0o
— CoinGlass (@coinglass_com) October 20, 2024
Such conditions can trigger cascading liquidations, resulting in forced sales on the spot market and causing sudden Bitcoin price drops.
A similar event occurred in August when Bitcoin prices plummeted by almost 20%, falling below $50,000 in just two days.
On October 21, Bitcoin reached $69,380 in early trading but faced resistance, pulling back to around $69,033.
As of now, the cryptocurrency is 6.4% shy of its all-time high of $73,738, according to CoinGecko.
Additionally, altcoins such as Ether and Solana have outperformed Bitcoin in recent daily gains.
Ether rose by 3.5%, reaching $2,750, while Solana saw a 6% gain, nearing $170. Both assets have since experienced slight pullbacks from their recent highs.
Bitcoin Open Interest Surges as Trump’s Winning Odds Increase
Bitcoin’s surge to a three-month high comes as markets anticipate the upcoming U.S. presidential election on November 5.
Polls show increasing chances of former President Donald Trump winning the election, which has bolstered the dollar.
His proposed policies on tariffs and taxes are expected to maintain higher U.S. interest rates, potentially weakening the currencies of trading partners.
Bitcoin saw a notable boost from Trump’s improving election odds, as his administration is viewed as taking a more lenient stance on cryptocurrency regulation.
On Polymarket, bettors favor Trump over Harris with 61 percent to 38 percent.
With no significant economic events scheduled this week, market attention is shifting to corporate earnings and the potential risks surrounding the U.S. election.
Chris Weston, head of research at Australian online broker Pepperstone, told CNBC that traders face a crucial decision on whether to intensify election-related trades with only 15 days left until the vote.
Weston suggested that the best way to hedge against the risk of Trump’s tariff policies is to hold long positions in dollars against the euro, Swiss franc, and Mexican peso.
Brad Bechtel, global head of FX at Jefferies, echoed this view, emphasizing that rising real interest rates were driving the dollar’s strength, particularly against those currencies.
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