• BlackRock and other firms have recently filed for exchange-traded funds (ETFs) which has caused an increase in institutional interest in Bitcoin derivatives and options contracts.
• Open Interest (OI) for Bitcoin Options Contracts has surged to $13.8 billion, close to its all-time high of $15.1 billion, according to blockchain analytics firm Glassnode.
• This suggests that market investors are increasing their exposure to risk-defined derivative instruments.
BlackRock ETF Filings Boost Institutional Interest in Bitcoin
BlackRock and several other firms have filed for exchange-traded funds (ETFs), causing a surge in institutional interest in Bitcoin derivatives and options contracts. According to blockchain analytics firm Glassnode, Open Interest (OI) for these contracts has soared to $13.8 billion, just $1.3B shy of the all-time high of $15.1B. This indicates that market investors are increasing their exposure to risk-defined derivative instruments such as futures and options contracts with expiry dates outside the fixed settlement date of a traditional futures contract.
What is Open Interest?
Open interest refers to the total number of outstanding derivative contracts that have not been settled yet – meaning there must be a buyer for every seller of a futures or options contract on the market at any given time. Options are similar to futures but do not have a fixed settlement date and can be renewed or extended beyond the original expiry date if necessary by either party involved in the transaction.
Options Demand Surges
According to Deribit, around $116 million in Bitcoin was traded on July 5th alone via options contracts – further evidence that professional traders are flocking back into the digital asset space following multiple ETF applications from leading asset managers such as Blackrock and others earlier this year.
What Does This Mean?
The increase in demand for Bitcoin options is a strong indication that institutional investors are becoming more active within the cryptocurrency markets, as they seek out new ways to gain exposure without having to invest directly into cryptocurrencies themselves – something which many traditional fund managers were initially reluctant or unwilling to do due largely due lack of regulatory clarity surrounding digital assets at large previously..
It appears that institutional investors’ attitudes towards cryptocurrencies have changed significantly since multiple applications for ETFs were submitted earlier this year – with open interest now nearing its all-time high as more traders flock back into this space seeking out new opportunities within an increasingly mature digital asset ecosystem overall