TL;DR
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‘Futures contracts’ are basically bets on whether a stock/asset (e.g. Bitcoin) is going to go up or down by a set date in the future.
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The more bets, the higher the ‘open interest.’ The higher the open interest, typically the higher Bitcoin’s price climbs.
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Open interest in Bitcoin futures just jumped from ~$8 to ~$10B – that’s the highest it’s been since the bear market began in May of last year!
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Which means either new money is flowing into the market, or existing participants are increasing their investments.
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Whichever way you slice it: more open interest = more money flowing into Bitcoin. We love to see it!
Full Story
You know how when the housing market is hot, there’s a higher volume of bids placed on homes?
And when it’s cooling off, the volume of bids goes down?
(I.e. More bids = higher prices).
In the futures market, this ‘bid volume’ is called ‘open interest.’
ICYMI yesterday: futures contracts are agreements from traders to buy or sell an asset (e.g. Bitcoin) at a set price on a specific date.
(They’re basically bets on whether a stock/asset is going to go up or down by a set date in the future).
When it comes to Bitcoin, the amount of ‘open interest’ is typically reflected in Bitcoin’s real-time price.
Or better yet:
If more bets are made on the future BTC price, the current price goes up.
If less bets are made on the future BTC price, the current price goes down.
Full disclosure: this isn’t a perfect description, and we’re skimming over many of the complexities here – but the correlation exists!
Just check this Bitcoin chart out:
