As new institutional funds flow into the bitcoin derivatives market, the Chicago Mercantile Exchange (CME) bitcoin futures contract reached a record 5,311 shares this week, or $250 million.
The importance of institutional funding
According to a recent tweet released by the Chicago Mercantile Exchange (CME), one of the world's largest Bitcoin derivatives markets, BTC1 is not available! The nominal spot value of the contract amount reached a record $250 million on June 17. This is equivalent to 26,555 bitcoins, an increase of 80% compared to last June's figures.
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It is believed that the rapid increase in the number of open-ended Bitcoin contracts was a direct result of the increase in institutional investors entering the market in the previous quarter. Given the tremendous growth in the cryptocurrency sector over the past few months, this is highly probable: Bitcoin has risen above $9, Facebook has entered the cryptocurrency sector, and Fidelity has launched crypto asset hosting services.
This is important because, over the years, the cryptocurrency market has been driven primarily by retail investors in an unregulated environment that lacks legitimacy and liquidity and is unable to attract larger players in the traditional financial sector.
However, over time, the recognition of Bitcoin as a means of decentralized value storage has increased, and we are now seeing a wave of funds entering the cryptocurrency market from funds, family offices, high net worth individuals and financial institutions. .
In addition to these funds, financial institutions have introduced much-needed consumer protection measures, filled new financial products that bridge the traditional financial gap, and helped drive the overall mainstream adoption of Bitcoin.
Increasing futures contracts will affect the price of Bitcoin
In the past few weeks, we have seen Bitcoin's impressive bull market rise to a new annual high, followed by a lot of short-selling on Bitfinex, Bitmex and other futures platforms. These flats have had a dramatic impact on the price of Bitcoin and directly led Bitcoin to refresh its recent highs.
Long-term flattening will also have a devastating effect on bitcoin prices, forcing traders with bullish bitcoins to close their positions after bitcoin prices have fallen sharply and cause bitcoin to fall further.
As reported in an earlier article, the bitcoin spread of the Chicago Mercantile Exchange (CME) also played an important role in the recent bull market, leading to large price fluctuations – including 600 on May 16 The plunge in the dollar and the rise of $350 on June 10. As new institutional investors enter the market, these spreads will only expand further.
Therefore, although the arrival of institutional investment is seen as a huge advantage in the encryption market, it is also likely to lead to an increase in the spread of the Chicago Mercantile Exchange (CME) and a mandatory liquidation that has an overwhelming impact on bitcoin price volatility.