The demand for Bitcoin futures on the Chicago Mercantile Exchange (CME) has long been seen as an indicator of institutional demand for Bitcoin, and for the first time since May, open interest dropped to a low of $345 million on October 2 last week.
Since hitting a low in March this year following a crash in not only crypto but all financial markets as a result of the worsening COVID-19 pandemic, institutional interest in Bitcoin spiked to record new yearly highs. Open interest in CME futures peaked at a whopping $948 million on August 17 but has been on a downtrend ever since. As the week came to a close on October 2, Bitcoin futures dropped by almost 20%.
Undoubtedly, the impact of Trump’s positive COVID-19 test leading to the drop in a majority of stock indices and other assets such as gold, crude oil and crypto last Friday contributed to the dip in CME open interests. Some experts, however, also pointed out that investors shifting away from Bitcoin futures is hardly a black swan event. The signs of investors increasingly turning to DeFi to maximize yields and liquidity are apparent.
DeFi projects have managed to sustain their rewards in yield farming thus far, while Bitcoin’s significant drop in prices last month have rattled investors’ interest in the asset, albeit temporarily. Moreover, the low barriers of entry into the world of DeFi continues to attract new market participants in droves.
It remains to be seen how long this balance will last, given that DeFi has been on a persistent downtrend recently.
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