Bitcoin Futures Open Interest Approaching 2021 Record High: Is a Bullish Surge Imminent?

Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) is approaching its all-time high, coming in at just $200 million below the October 2021 record. While many experts credit this surge to factors such as the potential approval of a Bitcoin ETF and the upcoming halving event, analyst Tony Sycamore believes there is more to it.
According to the latest report, the rise in Bitcoin’s price is accompanied by a growing interest in its futures open interest. This trend bears similarities to the metrics observed in 2021. Currently, Bitcoin futures open interest on the CME stands at $5.2 billion, a significant increase from the previous value of $3.63 billion in just 30 days. CoinGlass data reveals that the open interest surged from $1.46 billion to $5.45 billion between October 1 and October 21, 2021. This surge coincided with Bitcoin’s price rise from $45,000 to $66,000.
At present, Bitcoin is trading at $44,254.85, having increased by 6% in the last 24 hours. With a bullish score of 100/100, the asset has recorded a three-month price gain of 71%, adding $18,520.80 to its previous price. Bitcoin currently has a market cap of $865,058,416,048 and has risen by 16% in the past seven days.
Tony Sycamore, an analyst at IG Australia, believes that the increase in open interest indicates renewed interest in Bitcoin. However, he points out that the data does not provide enough information about the positioning of CME traders. The CME’s report, which may be released on December 12, is expected to shed more light on this. Sycamore refers to the CME’s report to the United States Commodities Futures Trading Commission (CFTC) on November 28, which showed that players were positioned net short at that time, with around 20,724 short positions and 18,979 long positions.
Sycamore notes that it is currently unclear whether the big players have shifted from a net short to a net long position. If the market becomes excessively long, there is a concern about a potential snapback. However, since the market was short last week, Sycamore believes there is no cause for immediate worry.
While the current market rally has been linked to the upcoming Bitcoin halving event and the potential approval of a Bitcoin ETF, Sycamore believes there are other factors at play. He suggests that the relationship between cryptocurrencies and the macro environment is a significant driver of the current uptick. In this regard, the recent report of a potential interest rate cut by the Federal Reserve could be the main driving force behind the price increase.
Sycamore concludes that there is more to this rally than just ETF or halving speculation. It seems to have taken on a life of its own.
Furthermore, traditional financial institutions are reportedly showing increased interest in Bitcoin, with CME surpassing Binance in Bitcoin futures open interest in November.
The current rally is not limited to Bitcoin, as other cryptocurrencies like Ethereum, Cardano, and Solana are also experiencing price increases and aiming to set new all-time high records.