TO report conducted by K33 research analysts has provided insight into institutional investors' appetite for bitcoin has increased ahead of a potential approval of a Spot btc ETF. The research firm emphasized one particular indicator to make its point clearer and provided more insight into what the future holds. bitcoin-spot-etf-application/” rel=”nofollow”>if these ETFs are approved.
The derivatives market: an indicator of institutional interest in bitcoin
In the report written by K33 senior analyst Vetle Lunde and head of research Anders Helseth, they noted that the derivatives market was important as it can be used to gauge institutional traders' interest in bitcoin. In line with this, they addressed how there has been a significant increase in open interest in the crypto-traders-rejoice-cme-boosts-btc-options/” rel=”nofollow”>Chicago Mercantile Exchange (CME) derivatives market.
The K33 report specifically noted that CME open interest has grown by over 34000 btc over the past week. Meanwhile, CME open interest remains near all-time highs of 110,000 btc. The increase in activity on the CME is due to the desire of these traders to gain exposure to bitcoin before the “imminent ETF verdict.”
With a bitcoin-spot-etf-sec-new-look/” rel=”nofollow”>possible approval on the horizon, it is believed that many traders are looking to make as much profit as possible from this bullish event. Meanwhile, others have become genuinely bullish on the flagship cryptocurrency and want to get exposure to it any way they can. The CME is arguably the most accessible means of gaining exposure to bitcoin for this class of investors.
Notably, K33 analysts highlighted how open interest on the CME exchange had increased bitcoin-futures-cme-q3-breaks-all-time-highs/” rel=”nofollow”>pace of return in october. Coincidentally or not, this happened when bitcoin and the crypto market in general took steamas many believed that the bitcoin Spot ETF rumors were the reason for the rally.
<img decoding="async" class="aligncenter size-medium" src="https://technicalterrence.com/wp-content/uploads/2023/12/Institutional-Investors-Increase-Appetite-for-Bitcoin-Ahead-of-Spot-ETF" alt="Tradingview.com bitcoin Price Chart” width=”3266″ height=”1530″ loading=”lazy”/>
btc price at $42,851 | Source: BTCUSD on Tradingview.com
CME to lose market share once ETFs approved
NewsBTC had in November reported how CME had surpassed Binance in bitcoin futures. Data from Coinglass also shows that the CME is still far ahead in terms of crypto-traders-rejoice-cme-boosts-btc-options/” rel=”nofollow”>bitcoin Futures Open Interest. However, that could soon change as the K33 report addressed the possibility of open interest in CME collapsing once these bitcoin Spot ETFs are approved.
An approval may cause selling pressure on CME as these institutional investors could look to take profits while others will look to transfer their capital into spot ETFs. K33 gave more details on the latter. The report noted that futures-based ETFs currently account for 46% of CME stocks. open interest.
Considering that futures and spot ETFs will compete directly, they expect the latter to become the more favorable option. As such, these K33 analysts anticipate a decline in open interest, which these futures ETFs represent. They project that many institutional investors will look to rotate a substantial portion of their capital into spot ETFs.
At the time of writing, bitcoin is trading at around $42,800, down in the last 24 hours, according to bitcoin/” rel=”nofollow”>data from CoinMarketCap.
Featured image by RIS Media, chart by Tradingview.com
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