Bitcoin

Grayscale Bitcoin Trust

The landscape of Bitcoin investment is undergoing a significant shift as demand for Bitcoin futures appears to be cooling off while investors increasingly turn their attention to Exchange-Traded Funds (ETFs). This transition follows the recent debut of US-listed ETFs that directly hold Bitcoin, marking a notable development in the crypto market. 
These developments mark a shift in the crypto landscape, with increased accessibility to Bitcoin through ETFs contributing to rising demand. 
<h2 class="wp-block-heading" id="bitcoin-features-investments-in-the-rocks">Bitcoin features investments in the rocks</h2> 
BTC futures are financial contracts that obligate the buyer to purchase or the seller to sell a specific amount of Bitcoin at a predetermined price on a specified future date.&nbsp; These features allow investors to speculate on the future price of Bitcoin without owning the cryptocurrency itself. 
BTC futures contracts have a specified expiration date, and traders can choose contracts with different expiration dates based on their trading strategies. 
Per available market data, Bitcoin’s futures market is witnessing a notable shift as demand cools in response to the closure of the ETF era. The open interest for CME Group BTC futures has dropped by approximately 24%, reaching 20,679 contracts by January 30, 2024. 
<a href="https://www.bloomberg.com/news/articles/2024-01-31/bitcoin-btc-futures-demand-cools-as-etf-era-closes-gbtc-arb-trade" rel="nofollow noopener" target="_blank">This decline </a>is attributed to the surge in popularity of spot BTC ETFs, with the launch of ten such ETFs causing a significant reduction in futures open interest. Investors are flocking to these spot ETFs, leading to a reevaluation of their strategies. 
The ETF era’s closure has implications for BTC’s overall market dynamics. The decline in futures demand is a direct response to investors shifting their focus towards ETFs, seeking alternative investment avenues in the cryptocurrency space with a hope for clear crypto regulations. 
The move towards ETFs is further emphasized by the drop in BTC prices, down 20% from post-ETF highs in Nov 2021. This correction is partially attributed to the sale of assets from the bankrupt crypto exchange FTX. 
At the time of writing, BTC is worth $42,739.58, up 0.4% from an hour ago and down 1.3% from yesterday. BTC’s value today is 6.9% higher than what it was seven days ago. In the last 24 hours, the total volume of BTC transactions was $23,144,472,691. 
The value indicates a 48.82% crypto market dominance, with the global crypto market cap sitting at $1.72 trillion. 
<h2 class="wp-block-heading" id="market-data-on-btc-futures">Market Data on BTC Futures</h2> 
According to data compiled by Bloomberg, open interest had previously peaked at an all-time high, primarily due to <a href="https://www.cryptopolitan.com/bitcoin-etfs-spell-trouble-in-finance/">Bitcoin’s</a> extraordinary 157% growth last year, which had been expected in anticipation of the ETF launches. 
The increased prominence of CME derivatives was due to the fact that they offered a regulated venue for BTC exposure. As spot ETFs that fulfill a comparable function have become available, open interest in CME BTC futures has decreased.&nbsp; 
<img decoding="async" width="620" height="349" src="https://lh7-us.googleusercontent.com/OU0wVPNM2bcnEGqu2g7xB9E2rwid9ZseQR9QgtlNXPPLZDUBEb-TVwemeJaP2J7D1Wo8smJJ8E4C9ORk8LSx1OzNEt4JzGNVv6dtkl6BJQCfw1K3uI0qEXWqquYJNZbDzp7LJmT_SPNWszuVRl_7oIg"> 
Futures contracts were additionally employed in arbitrage strategies pertaining to the Grayscale Bitcoin Trust (GBTC), which is valued at $21 billion. However, according to DACM, a manager of crypto assets, this specific transaction appears to have run its course. 
Vetle Lunde, a senior analyst at K33 Research, observes that despite the possibility of diminished activity in CME BTC futures as a result of investors transitioning to US ETFs and BTC’s moderating rally, these contracts continue to be vital and exceptionally liquid constituents of the crypto market.&nbsp; 
Lunde underscores the prospective function of ETF units as hedging instruments for authorized participants engaged in the management of ETF unit creation and redemption. 
CME and Binance, a crypto exchange, are prominent platforms for BTC futures. According to recent data obtained from Coinglass, a substantial portion of the aggregate decline in BTC futures activity can be attributed to the decline in CME open interest.

Investors abandon ship on Bitcoin Futures – ETFs dominate the crypto scene

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