With futures contracts trading beyond $100,000 on well-known platforms like Deribit, the Bitcoin (BTC) market indicates an optimistic view beyond the spot market. More importantly, demonstrates increased investor confidence in BTC’s long-term price trajectory.
Bitcoin Futures Pricing Breakthrough
According to recent data from Deribit, BTC futures contracts expiring in March 2024 rose to $101,992, almost 5% more than the average spot price of $97,200 for BTC. At $104,948 and $107,690, futures scheduled to mature later in the year traded even higher, indicating positive enthusiasm.
Based on this pattern, the Bitcoin price will likely surpass $100,000 shortly. Bitcoin options mirror a similar pattern to BTC’s price, as evidenced by the notional open interest of $2.13 billion for the $100,000 call option, indicating strong demand.
Institutional Demand: CME Open Interest Hits New Highs
With CME announcing a record-breaking open interest (OI) of 218,000 BTC, valued at $21.3 billion, institutional interest in Bitcoin futures is rising. Compared to the levels recorded before the November 5 US presidential election, the current OI figure indicates a 33% increase.
This rising OI indicates market participants’ optimistic sentiment about BTC. According to K33 research, the recent increase in CME open interest is higher than the yearly averages observed before 2022.
This momentum is primarily driven by active traders and institutions rather than growth from futures-based ETFs, particularly ProShares Bitcoin ETF (BITO). However, the combination of US spot ETF options and CME futures trading would support the incorporation of BTC into established financial systems.
Meanwhile, one crucial factor for reducing market volatility is the prevalence of cash-margined contracts on CME. Cash-margined contracts use fiat currencies or stablecoins as collateral, stabilizing trading activity, unlike crypto-margined agreements, which are naturally volatile.
Currently, 33% of the futures market comprises cash-margined contracts, while crypto-collateralized contracts have fallen to a historic low of 16%.
The Path to a $2 Trillion Market Cap
Bitcoin is about to hit a $2 trillion market valuation for the first time since its launch. Analysts forecast that Bitcoin could trade at almost $101,000, given that its overall evaluation is $1.93 trillion.
In addition, Bitcoin’s market domination keeps growing; it holds 61.8% of the total cryptocurrency market share. According to Glassnode data, Bitcoin’s realized volatility has gradually decreased from over 100% to roughly 40% as its integration into conventional financial systems continues.
This downtrend indicates that the asset is gradually conforming to mainstream investment standards. Moreover, the decreased volatility increases Bitcoin’s appeal as a haven investment.
Historic Moment for Bitcoin Futures and Schiff’s BTC Regrets
The increasing BTC holdings by institutional investors highlight the coin’s potential to transform the global financial environment and decrease market volatility. The coin’s long-term price trend remains upward, driven by strong demand and growing public acceptability.
Meanwhile, a long-term Bitcoin critic, Peter Schiff, recently regretted not investing in the leading digital asset when he first learned about it in 2010. Schiff has long criticized BTC, dismissing its value and labeling it a speculative asset.
However, he acknowledged that if he invested in the crypto asset ten years ago, he would have benefited from its over 20,000% price surge. Schiff’s motivations for similar investments are based on hypothesis.
He wouldn’t have bought Bitcoin out of conviction but rather to capitalize on others’ “foolishness.” In contrast, Schiff champions gold as a superior asset, emphasizing its tangible properties and real-world utility.
He recently argued on a popular podcast that BTC’s purpose is diminishing due to the rise of spot Bitcoin ETFs. Schiff argued that these ETFs undermine the digital asset’s self-custody and decentralized benefits.
Notably, BTC’s price has doubled since the start of the year and has surged by 40% since the US elections. Hence, all BTC holders (regardless of the time of their purchase) are currently in profit.
On-chain data shows that BTC trades at $97,716, up 3.7% in the past 24 hours.
