March just past is not the best month, nor is it the first quarter of 2020. Last month, Bitcoin fell from over US $ 9,000 to below US $ 4,000, offsetting several months of gains and pulling the price of the cryptocurrency to an annual low before a weak recovery. In a similar recession, the market is eager to fluctuate, and the exchanges that provide Bitcoin futures, the trading volume soars instantly, but the holdings continue to decrease.
Although the market decline caused the price of Bitcoin to fall by nearly 50% and the total value of derivatives exchange transactions exceeded 30 billion USD, the market recovery looks far from simple.
Broadly speaking, the Bitcoin futures market can be divided into alternatives-regulated exchanges such as the Chicago Stock Exchange (CME) and Intercontinental Exchange (ICE) digital asset platforms Bakkt, and unregulated transactions such as BitMEX, Binance and OKEx Place. The former is not only subject to strict supervision by the US Commodity and Futures Trading Commission (CFTC), but its customers are also directly affected by the US Federal Reserve Bank.
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CME Bitcoin futures open positions February to March 丨 Source: skew
Since the price decline on March 12, there have been differences in the regulatory lines of the open interest (OI) of the Bitcoin Futures Exchange. For example, between March 6 and March 14, the OI of CME Bitcoin futures fell from $ 217 million to $ 107 million, and plunged on March 12. However, since then, OI has recovered, as of press time, OI was 142 million US dollars, equivalent to its March 12 level.
On the other hand, BitMEX, Binance and OKEx's OI is still in decline. From March 7 to March 17, BitMEX's OI dropped from 1.4 billion U.S. dollars to 528 million U.S. dollars, a drop of 62%, and by the time of publication, only 20 million U.S. dollars had recovered. OKEx's OI dropped from US $ 1 billion to US $ 461 million, and fell 53% between March 6 and March 13. Although its recovery of USD 100 million is greater than that of BitMEX, it still accounts for a relatively small proportion of the overall OI compared to CME.
BitMEX and OKEx bitcoin futures open positions from February to March 丨 Source: skew
From these data, there are two trends. First, CME saw that the position was closed before it fell on March 12 (earliest on March 6) because U.S. institutional investors studied the collapsed stock market caused by the pandemic because they needed cash or other safe-haven assets The liquidity of Bitcoin futures positions was liquidated. And the price plunge will only accelerate their liquidation.
Second, as the Fed announced an increase in quantitative easing policy, lowered interest rates to near zero and the US Congress approved a 2 trillion US dollars stimulus plan, the market began to pick up. The US stock market began to recover moderately, recovering 12.3% between March 24 and March 31.
A post-effect or possible inevitable result is that due to artificial injections, the bitcoin futures position of the Chicago Mercantile Exchange begins to increase, and this will not happen on unregulated exchanges (such as BitMEX, Binance and OKEx Wait).