Futures data suggests latest Bitcoin rally is just short-covering, most Bakkt contracts aren’t being settled ๐จ This article is 5 years old...
Futures data suggests latest Bitcoin rally is just short-covering, most Bakkt contracts aren’t being settled
1 min read
Updated: Mar. 20, 2020 at 2:45 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
A massive drop in open interest on the CME and Bakkt Bitcoin futures contracts indicates short-covering has fueled BTCโs latest rally, likely egged on by the expiry of Bakktโs December contract.
On Tuesday, open interest rocketed more than 1,000 percent on the cash-settled CME contract for December, the day after Bakkt hit an all-time-high for open interest on its physically-settled December contract, according to analytics outfit Skew Trading.
Shorts covered
The next day, open interest fell off a cliff on Bakkt and CME, dropping by 39% and 25% respectively . Coinciding with Bitcoinโs sharp thousand-dollar rally to the upside, the sudden drop in open interest suggests both CME and Bakkt traders have been exiting a large number of short positions and driving BTC up.
Wednesday's Bakkt Bitcoin Monthly Futures:
? Traded contracts: 6601 ($47.30 million, +74%) (New ATH ?)
? All time high: 6601 (12/18/2019)
? Open interest: $3.98 million (-39%)Knowing bots, we recommend this smart trading bot: https://t.co/W8ClGYnuNn pic.twitter.com/yfGFHrhXec
— Bakkt Volume Bot (@BakktBot) December 19, 2019
The timing of the rally is hardly surprising โ coming just hours before the expiry of the Bakkt December contract. As previously reported by CryptoSlate, Bakkt’s push to offer cash-settled futures has called into question whether institutional traders are interested in gaining exposure to Bitcoin via physically-settled futures contracts. As such, the latest short cover suggests Bakkt’s contracts are functioning mostly as a vehicle for short-term speculation.
Many traders appear to have rolled over their contracts to January on both Bakkt and CME, however, which could translate to bullish sentiment for Bitcoin’s longer-term outlook.
Mentioned in this article
![Skew [acquired by Coinbase]](https://cryptoslate.com/wp-content/themes/cryptoslate-2020/imgresize/timthumb.php?src=https://cryptoslate.com/wp-content/uploads/2019/11/skew-logo.jpg&w=16&h=16&q=75){kind=logo}
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
CME Group
CME Group is a global markets company empowering participants to efficiently manage risk and capture opportunities in every major asset class..
Bakkt
Bakkt is a new company of NYSE-operator InterContinental Exchange (ICE) designed to bring digital assets to the mainstream and help unlock the potential of this important technology.
![Skew [acquired by Coinbase]](https://cryptoslate.com/wp-content/themes/cryptoslate-2020/imgresize/timthumb.php?src=https://cryptoslate.com/wp-content/uploads/2019/11/skew-logo.jpg&w=100&h=100&q=75){kind=logo}
Skew [acquired by Coinbase]
Skew was founded in 2018 by two derivatives traders and is backed by leading international venture funds.
