CME Bitcoin Futures Hit Record High, But Uncertainty Hovers Above $36K

Bitcoin futures on the Chicago Mercantile Exchange (CME) hit an all-time high of $3.65 billion on November 1. shorts) fit continuously.

Bullish momentum on CME Bitcoin futures, but cautious BTC options markets

The number of active large holders rose to 122 in the week of October 31, indicating growing institutional interest in Bitcoin (BTC). Notably, the Bitcoin CME futures premium has reached its highest level in more than two years.

In independent markets, annual premiums typically fall in the 5%-10% range. However, the recent 15% premium for CME Bitcoin futures stands out, indicating strong demand for long positions. This also raises concerns, as some may rely on the approval of a Bitcoin exchange-traded fund.

Contrary to the bullish sentiment coming from CME futures, evidence from Bitcoin options markets shows growing demand for defensive options. For example, the call-to-open interest ratio hit a more than six-month high on the Derbibit exchange.

The current level of 1.0 indicates balanced open interest between call (buy) and put (sell) options. However, this indicator requires further analysis, because investors could have sold the call option, gaining positive exposure to Bitcoin above a certain price.

Regardless of demand in the commodities market, the price of Bitcoin is ultimately dependent on spot exchange flows. For example, on November 2, the rejection of $ 36,000 made a correction of 5%, which brought the price down to $ 34,130. Interestingly, the Bitfinex exchange saw $300 million in net BTC per day during this period of activity.

The fourth largest move of #Bitcoin to @bitfinex yesterday, was about $300M. #Bitcoin started to decline as soon as earnings started.

Very bullish, significant selling pressure and #Bitcoin still above $34,000 pic.twitter.com/I72N686HfH

— James V. Straten (@jimmyvs24) November 3, 2023

As analyst James Stratton noted, whale stocks coincided with Bitcoin's waning momentum, indicating a possible correlation between the movements. However, the decline did not breach the $34,000 support, which indicates real buyers at that level.

Bitcoin's latest correction came as futures on the Russell 2000 index, which measures mid-cap companies in the United States, gained 2.5% and hit a two-week high. This shows that Bitcoin's movement is unrelated to the US Federal Reserve's decision to keep interest rates at 5.25%.

Additionally, gold prices were steady around $1,985 between November 1 and November 3, indicating that the world's largest store of value was unaffected by monetary policy announcements. The question remains: How much selling pressure do Bitcoin sellers still hold at $36,000?

A reduced bitcoin exchange may be cheating.

As the $300 million daily net income to Bitfinex shows, only evaluating current deposits on exchanges does not provide a clear indication of the presence of short selling. The low number of deposited coins may reflect investor confidence in the exchanges.

In addition to legal challenges by the US Securities and Exchange Commission against exchanges Coinbase and Binance for unlicensed brokerage operations, the FTX-Alameda Research debacle has raised more concerns among investors. Recently, US Senator Cynthia Lammis called on the Department of Justice to take “swift action” against Binance and Tether for their alleged involvement in facilitating funds for terrorist organizations.

Related: SEC Seeks Summary Judgment in Do Kwon vs. Terraform Labs Case

Finally, the cryptocurrency market has been impacted by the increase in revenue from traditional fiat fixed income operations, a once-profitable cryptocurrency product that disappeared in May 2022 following the collapse of Luna-TerraUSD. This move had lasting effects on the credit sector, leading to the collapse of several intermediaries, including BlockFi, Voyager and Celsius.

Currently, growing institutional interest in Bitcoin derivatives is undeniable, according to CME Futures. However, this may not be directly related to low availability, making it difficult to predict supply between $36,000 and $40,000 – a level that remains uncertain as of April 2022.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.