Institutional interest in Bitcoin funds and futures soars ahead of first ETF's arrival
Institutional interest in Bitcoin funds and futures soars ahead of first ETF's arrival By Hannah Perez

Open interest in Bitcoin futures

on CME hit an all-time high while total crypto mutual fund assets also increased.

***

Institutional capital inflows into cryptocurrency funds and futures is surging following news of the launch of the first Bitcoin

ETF in the United States.

As we reported earlier, the first Bitcoin exchange-traded fund (ETF) will debut on the New York Stock Exchange (NYSE) this week. It’s the ProShares ETF, which is tied to Bitcoin

futures and will begin trading on NYSE tomorrow, Tuesday, October 19. The milestone seems to be causing quite a stir, attracting investors to the cryptocurrency space.

CME records all-time high for open interest in BTC futures

According

to data from Bybt, open interest in Bitcoin futures

has hit an all-time high on the Chicago Mercantile Exchange (CME) amid euphoria over the arrival of the first ETF.

The CME recorded a record USD$3.6 billion in open Bitcoin futures contracts on Monday, surpassing the previous high of USD$3.26 billion recorded in February 2021. Total open interest in Bitcoin futures

has also surpassed $23 billion for the first time in five months. Institutional interest in Bitcoin funds and futures soars ahead of first ETF's arrivalInstitutional interest in Bitcoin funds and futures soars ahead of first ETF's arrival</ref>.a>Source: Bybt.com

Open interest is the total number of futures

contracts held by market participants at the end of the trading day. It is used as an indicator to determine market sentiment and the strength behind price trends, as well as representing the inflow of new money into the market.

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It should be noted that Bitcoin futures allow investors to gain exposure to the leading cryptocurrency without having to hold the asset. These leverage-intensive trades are cash-settled; that is, investors receive dollars instead of Bitcoin

once the contracts are settled.

Sentiment in the cryptocurrency market has been soaring for several weeks, fueled by rumors of the first Bitcoin-based

ETF to enter Wall Street. Although the U.S. Securities and Exchange Commission (SEC) has nearly a decade of rejecting all such fund applications, a first ETF has finally been approved.

Cryptocurrency enthusiasts had been waiting for ETF approval for a long time, anticipating the event as a major milestone that could usher in a trend of widespread adoption.

Cryptocurrency Funds Also See Increases

In

addition to driving open interest in the futures market and pushing the Bitcoin price above USD $60,000 for the first time since May, the news has also led to an increase in the total volume of total assets under management in cryptocurrency funds tracked by CoinShares

.

According to a recent report from CoinShares

, total assets held by institutional managers reached USD$72.3 billion for the week ending Sunday, October 17, which represents the highest level ever recorded. By comparison, institutional cryptocurrency holdings were worth USD$57 billion in March and reached USD$71.6 billion in May.

In total, cryptocurrency investment funds recorded inflows of about $80 million over the past week. Bitcoin

products attracted the largest investments with USD$70 million, marking the fifth consecutive week of inflows.

Although investors were also interested in some investment vehicles linked to the major altcoins. According to the report, institutional investors increased their holdings of <a href=”https://www.diariobitcoin.com/glossary/polkadot/” target=”_blank” rel=”noope

ner”>Polkadot (DOT) and Cardano (ADA) by USD$ 3.6 million and USD$ 2.7 million, respectively. Meanwhile, Ether (ETH) products recorded minor outflows totaling USD$1 million.

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In terms of fund provider, ETC Group and 21Shares saw the largest weekly inflows with USD$63.6 million and USD$19.3 million, respectively. Meanwhile, inflows into Grayscale products, which represent the largest cryptocurrency-focused funds, saw no increase.

ETF could spark greater institutional adoption

The surge of fresh capital to the market came as the price of Bitcoin rose 12% last week amid expectations and rumors of an ETF. The price action also boosted major cryptocurrencies in the market.

For the time being, while the SEC still has dozens of similar fund proposals to review, experts anticipate that this first ETF could pave the way for the approval of upcoming crypto investment products, as well as could spark more liquidity to enter the market. The CoinShares team wrote about it in their report:

The SEC’s recent decision to allow a futures-based ETF in the U.S. could generate more significant inflows in the coming weeks as U.S. investors begin to add positions.

Amid news of the ProShares ETF’s debut, Grayscale reiterated that it is aggressively working to convert its Grayscale Bitcoin Trust (GBTC) fund into an ETF. The manager had already announced such plans in April this year, but its optimism for the launch of such a product has increased in light of the SEC’s recent approval.

Recommended Reading

Sources: CoinDesk, CoinShares, Cointelegraph, CryptoBriefing, Decrypt, archive

Version by Hannah Estefania Perez / DiarioBitcoin

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