Brace for it – Bitcoin Futures may be nearing a tipping point

Sunday 20 September 2020, 4:48 AM AEST - 1 month ago

Whats the tipping point for Bitcoin Futures on top derivatives exchanges like the CME, an exchange that has recorded a daily trading volume of over $300M and Open Interest of over $400M, consistently, for the past 3 months.

skew_cme_bitcoin_futures__total_open_interest__volumes_-2-2.pngSource: Skew

Well, a small shift in Open Interest or trading volume can have a cascading effect on Bitcoin Futures performance in the next 180 days. Such a shift will be influenced by several factors, and it begins at the tipping point. Three factors, to be more specific.

In the current phase of Bitcoins market cycle, these factors are more relevant for traders on derivative exchanges. This becomes more evident when the Liquidations chart for BitMEX is observed. Over the past 3 months, sell liquidations have paid for buy liquidations. However, over the last few days, this trend has been reversed, and buy liquidations have covered for sell liquidations on BitMEX.

skew_bitmex_xbtusd_liquidations-2.pngSource: Skew

The point here is to detect the source of the domino effect before the dominoes start falling. In the case of Bitcoin Futures, the tipping point may be closer than anticipated.

One of the top factors influencing the tipping point is the Law of the Few.

The Law of the Few states that the success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts.

In the case of Bitcoin, institutional investors, derivatives traders, and whales fit the bill. The success of Bitcoin Futures in the global trading community heavily relies on institutional investors trading on CME. In fact, the daily trade volume and Open Int ...

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