The launch of spot Bitcoin exchange-traded funds (ETFs) has reduced demand for Bitcoin futures. Open interest for the CME Group’s Bitcoin futures has dropped around 23% after the launch of the spot Bitcoin ETFs, as of January 30.
The drop notably comes after open interest hit a record high amid Bitcoin’s impressive near 160% surge seen last year in anticipation of the launch of these spot ETFs in the country.
CME’s derivatives, once a go-to for investors eyeing regulated Bitcoin exposure, face competition from these new spot ETFs. These products were used in an arbitrage trade involving Grayscale’s $21 billion trust GBTC, but that trade has now faded after the trust’s conversion to a spot Bitcoin ETF.
According to Richard Galvin, the co-founder of DACM, many traders took advantage of the GBTC discount by buying GBTC and shorting Bitcoin futures on the CME. While the trade was attractive, investors have now moved to sell their GBTC shares and closed their CME positions, which has reduced the open interest.
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- Source: https://www.cryptocompare.com/email-updates/daily/2024/jan/31/
