Institutional Investors Are Pouring Into Bitcoin Derivatives

  • Institutional investors are pouring into bitcoin.
  • Trading volume across top U.S.-regulated BTC futures markets is skyrocketing.
  • Retail investors are losing interest in the pioneer cryptocurrency.

The massive downturn that the cryptocurrency market experienced over the last week sent retail investors into “extreme fear,” according to the Crypto Fear and Greed Index (CFGI). Even Mark Dow, a former U.S. Treasury and International Monetary Fund economist, boasted on Twitter that bitcoin was “dying” after the sell-off. But data shows otherwise.

As bitcoin plummeted below $8,000, U.S. regulated BTC futures markets saw their volumes skyrocket. The increasing demand for crypto derivatives products is a clear sign of the growing interest among institutional investors despite the high levels of volatility in the market.

Bitcoin futures contracts volume across institutional and retail exchanges. | Source: Skew

Trading Volume Explodes on U.S. Regulated BTC Futures Markets

Bitcoin’s market value took a nosedive in the last two weeks. The flagship cryptocurrency went from trading at a high of $9,100 on Nov. 11 to a low of $6,600 on Nov. 25.

During this time period, there was nearly $1 billion worth of long and short positions liquidated on BitMEX, a Seychelles-based crypto derivatives trading platform.

Bitmex Liquidations
$1 billion has been liquidated in BitMEX since Nov.11. | Source: DataMish

Despite the massive amount of retail investors that got rekt on this platform, institutional investors appear to have bought the dip.

On Nov. 22, Bakkt, a physically settled bitcoin futures exchange, saw its trading volume shoot up to reach a new all-time high. According to data gathered from the Intercontinental Exchange (ICE), 2,728 BTC monthly futures contracts were traded on this day alone, which is equivalent to over $20.3 million.

The sudden spike in volume represents a 66% increase over the previous 24-hour period. And, it is 30% greater than Bakkt’s previous all-time high of 1,756 BTC on Nov. 9.

Bakkts's Bitcoin futures contracts volume

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