Investors are magnetically attracted by the expiration of the $1.1 billion Bitcoin and Ether options scheduled for Friday, June 26, but may be missing some relevant indicators from the futures contracts.
June 26 will also be the last day of trading for many weekly and monthly Bitcoin futures (BTC) which total $665 million at the close of this issue.
For futures participants, long (buyers) and short (sellers) positions are always balanced; therefore, no impact on price can be inferred. Despite this, some more nuanced indicators are providing telltale signs of professional traders‘ sentiment.
The rise from USD 300 to USD 9,700 on June 22 may have been a small indicator of the next trend, and the premium on long-term futures contracts tells a similar story. This is measured by comparing the price of the July contract against the June contract, the one-month premium and the three-month premium of September against June.
Some exchanges provide additional data, either by analyzing the positions of major traders or by consolidating customers‘ net exposure in swaps, futures and spot positions. Currently, both Binance and OKEx show similar bullish data, indicating that professional traders are bullish.
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The graph above shows the open interest for all future contracts, including perpetuals. OKEx provides the largest figure, $900 million, while the Chicago Mercantile Exchange (CME) currently handles $450 million.
The premium for long-term futures contracts
BTC 3-month futures annualized premium
Skew’s previous data shows that the premium for three-month futures contracts has been increasing steadily in recent months. This market situation is called contango and is certainly a bullish indicator, as sellers are demanding more money to postpone settlement.
This is exactly the opposite of what happened in mid-April, when Bitcoin Investor failed to break through the $7,500 resistance level and retreated to the $6,800 level, causing temporary bearish sentiment.
Not even the May 10 drop to $8.1 billion that liquidated $200 million of Bitcoin caused such havoc with this indicator.
The average price of open interest
Currently, there are $665 million in futures contracts that expire this Friday. This does not include perpetual and quarterly contracts that expire in September, hence the difference with Skew’s $4 billion of aggregate open interest.
The Chicago Mercantile Exchange (CME) leads the pack when it comes to analyzing Friday’s expiration with USD 216 million only. Keep in mind that this regulated exchange has a much greater transparency, so inflated numbers are less likely to occur as in most cryptomoney derivative exchanges.