Bitcoin is making headlines again, and not just because of its price. The amount of money riding on its future is at an all-time high.
Record High Open Interest
This week saw Bitcoin futures open interest hit a record-breaking $80 billion! That’s a 30% jump since the start of May. This means more people than ever are betting on Bitcoin’s price going up. Many are using borrowed money to make these bets, which makes things riskier. A big price drop could force some to sell, potentially causing a market crash.
ETFs Add Stability
But there’s a counterbalance. Bitcoin exchange-traded funds (ETFs) have seen over $2.5 billion in inflows this week. This means institutions are buying actual Bitcoin, not just trading contracts. This real-world buying adds stability to the market, providing support when things get shaky.
Big Bets on High Prices
The options market is also showing huge interest. On Deribit, over $1.5 billion worth of bets are placed on Bitcoin hitting $110,000 and $120,000. There are also massive bets at $115,000, $125,000, and $130,000. This suggests many believe Bitcoin will continue its climb well above $100,000. However, it also means a huge amount of money is tied up in a relatively narrow price range.
Expiry Day Jitters
A significant amount of Bitcoin contracts – nearly $2.76 billion – are set to expire soon. Currently, there are slightly more bets on a price drop than a rise. The “max pain” point – where most options become worthless – is around $103,000. If the price heads towards that level, we could see some dramatic price swings.
Bitcoin Nears $112,000
Bitcoin’s price recently touched $111,999, a new all-time high. This rise has been steadier than previous breakouts, possibly due to easing US-China trade tensions and the recent downgrade of US debt by Moody’s. People are looking for alternative investments.
What’s Next?
The future is uncertain. Will ETF demand continue to offset the risk of the heavily-bet futures and options markets? A small price drop could trigger a massive sell-off. But continued ETF inflows could keep the rally going. One thing is certain: volatility is here to stay.
