In brief

  • Aggregated open interest on Bitcoin futures across 12 exchanges rose above $13 billion on Thursday.
  • CME accounted for $2.4 billion of that figure, with OKEx and Binance also registering at least $2 billion each.
  • Increased synthetic interest can make the market more volatile.

Aggregated open interest in Bitcoin futures hit a record high on Thursday, January 14.

According to market data from Skew Analytics, which tracks 12 leading crypto derivatives exchanges, aggregated open interest topped $13 billion yesterday.

The largest market for Bitcoin Futures is CME, with roughly $2.4 billion, followed by OKEx ($2.2 billion), and Binance ($2 billion). The remaining exchanges include Bakkt, Bitfinex, BitMEX, Bybit, CoinFlex, Deribit, FTX, Huobi, and Kraken.

Aggregated open interest for November 2020 through January 2021. Image: Skew Analytics
Aggregated open interest for November 2020 through January 2021. Image: Skew Analytics

Open interest represents the number of contracts waiting to be settled. Thus, as the name suggests, it serves as a guide to whether interest in the market is rising or falling. By contrast, aggregated open interest, which is what Skew tracks, puts a dollar value on those outstanding contracts.

Bitcoin futures let traders bet on future price. Traders enter into a contract to buy or sell BTC at a certain price at a specific point in the future. If a buyer, for example, thinks the price is going to rise heavily but can lock in a deal to buy it later at today’s rate, they’ll be happy. 

Whereas an individual investor could bet on the price of BTC going up by just buying some Bitcoin—or speculate that it would head downward by selling it—futures function a bit differently. For starters, there’s no need to actually hold the cryptocurrency. Moreover, most futures contracts are settled in cash, meaning that Bitcoin doesn’t change hands—just its equivalent in dollars.

Much of the uptick in aggregated open interest is attributable to CME. One month ago, on December 15, the total figure was at $7.5 billion across all 12 exchanges. At that point, CME accounted for $1.1 billion, compared to its $2.4 billion today. Binance and OKEx, meanwhile, have each tacked on an additional $800 million in contracts since then.

"Having high synthetic and leveraged interest fundamentally changes the structure of the market," Thomas Kuhn, a macro analyst with research firm Quantum Economics, told Decrypt. "It becomes more volatile with more stop-outs and makes new trading strategies viable as the mostly retail synthetic punters have been pursuing long or short momentum strategies."


Daily Debrief Newsletter

Start every day with the top news stories right now, plus original features, a podcast, videos and more.