(photo: Worldspectrum)
31.03.2021, 14:48

Bitcoin Futures Open Interest Surges as Gold Loses Shine

According to data from Finbold, bitcoin futures open interest on various exchanges grew by 133.74 per cent in the first quarter of 2021 from US $9.66 billion to $22.58 billion.


The company attributes the spike in bitcoin futures open interest to a surge in the underlying price of the asset class as a result of the entry of corporates and institutional investors (and, perhaps most publicly, Tesla Motors) into the sector.


Institutions might be considering adding more bitcoin to portfolio

The report suggests the growth in open interest might also indicate institutions from traditional finance are considering adding more bitcoin exposure to their portfolios. As institutional investors continue hedging using futures, the demand for leverage increases. It also suggests demand for Bitcoin futures may be displacing gold futures open interest which plunged over the same period by 17.54 per cent from US $116.30 billion to US $95.90 billion (reflecting a 9 per cent fall in the price of gold traded on metals and commodities markets).


The report's authors posit further that "decreasing open interest in gold suggests that the buying power is drying up, and thus at least a corrective downswing is to be expected."


The growth in bitcoin open futures offers validation for cryptocurrency supporters to believe the asset will eventually replace gold as the store of value.


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