Open interest on Bitcoin futures in the Chicago Mercantile Exchange (CME) reached the lowest point in over six months, reports Skew analytics (@skewdotcom). The exchange was the second to offer such futures, after the Chicago Board of Options Exchange (CBOE).

Open interest in futures is different than open volume or trading volume on a normal exchange. Futures are an investment vehicle that allows traders to buy an asset based on a future contract price. As such, open interest indicates investor willingness to risk on future value estimates.

Why the CME Vacancy?

The CME is the world’s leading and most diverse derivatives market, which offers traders a dramatically wide variety of instruments to invest in. Bitcoin futures have their highest trading volumes on the exchange.

The decline in open interest on a major futures exchange could be the result of several causes. For example, traders could be closing out books for the end of the year in anticipation of finalizing portfolios, as the tweet indicates.

Bitcoin’s volatility is well known, and the market, while being relatively stable in the short term, is still anyone’s guess. Because Futures are predictive, the decline in open interest could be based on a lack of clarity in the market future.

Additionally, as the Bitcoin ‘halving’ approaches, many traders may be worried about how the market will respond. Dramatic sell-offs by capitulating miners could cause the price to decline for short periods artificially. Such market forces could leave traders holding the bags.

Liquidity Tanking?

While futures are a nifty trading vehicle, they do not particularly indicate what prices will do. Nevertheless, a dramatic decline in open interest does indicate that the investment community is closing positions to protect assets.

Interestingly, as traders close contracts, the liquidity in the futures market responds rapidly. Every contract requires a maker and a buyer, and as fewer contracts come available, the liquidity in the futures market dries up.

This could have an interesting effect, as news of the halving becomes more clear. If the market begins to show signs of stability, the low open interest could well provide the necessary force to drive prices up, as traders seek to open new positions on the provably stable asset.

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