Interests on Bitcoin futures hit $10B, its highest ever.
This means that there’s $10B worth of bets on the future price of Bitcoin. Jibing with the record is a bumper weekend for Bitcoin’s price, which shot past $30,000 yesterday, reaching an ATH price of $34,608.
Future contracts are Bitcoin derivatives that involve traders agreeing to buy some Bitcoin in the future at an agreed price beforehand.
It means that if Bitcoin rises by the time the contract expires, the person who bought the contract will profit because they can sell that Bitcoin on the open market. If Bitcoin’s price falls, then the trader will have lost money.
Open interest means the numbers of the Bitcoin futures contracts that are yet to be settled. Come deals expire after a specific amount of time, which elaborates why futures contracts’ open interest dropped from $9.4B last December 31 to $8B on January 1.
Other future contracts are named perpetual agreements, which means that traders can cash out whenever they want. And futures contracts are different from options contracts, which give traders the obligation to buy Bitcoin upon expiry.
Nevertheless, the volume of the futures picked right back up last January 2. Mainly for two reasons. First is that futures traders, whose contracts had just expired, have seen Bitcoin‘s booming price and preferred to reinvest. The second is that several new traders witnessed Bitcoin’s price break past $30,000 yesterday and wanted to be in action.