Despite FTX Collapse Bitcoin Futures Surge

As smaller investors flee the FTX-ravaged cryptocurrency sector, institutions are increasing their long positions in the futures markets for the two leading tokens.

CME GroupCME
reported a 42% increase in bitcoin futures open interest contracts this month to 18,713 as of November 11. Each contract on the regulated Chicago-based derivatives exchange – the world’s largest – is equivalent to 5 bitcoins, or $81,780 at today’s prices. Open interest refers to the money that investors tie up on an exchange as collateral for open positions.

Ether saw an even steeper 62% jump in futures yields compared to late October. Those contracts are for 50 coins, or about $61,250. The combined CME Group open interest in bitcoin and ether reached about $1.5 billion on Friday.

Far from deterring institutions from trading crypto futures, the increase in volatility has attracted CME market participants, including ProShares for its BitcoinBTC
Strategy ETF (BITO) and non-bank hedge funds that match their sell trades with the crypto funds’ buy positions.

Gibraltar-based LMAX Digital, one of the most respected spot crypto exchanges for institutional clients, saw a 133% increase in its daily trading volume since November 4, before the FTX collapse.

In that period, the global cryptocurrency market has shrunk 22.3% to $823 billion.

Cryptocurrency prices have been punished by the fall of FTX, the Bahamas-based crypto exchange, and its sister company Alameda Research, a hedge fund. Bitcoin retreated to 2020 levels as low as $15,892 over the weekend. It has since recovered to $16,359 per bitcoin, but is still down 23% from Nov. 4, according to Nomics.

Ether has also fallen 25% over the same period to $1,224.

Cryptocurrency deposits have also increased. While retail clients may be reeling from frozen funds and billions in limbo due to the FTX bankruptcy, Europe-based Coinshares, a major cryptocurrency spot manager, reported inflows of $42 million into the digital asset industry in the first week of the FTX crisis. This was the highest amount of inflow after two months without any meaningful change in the fund’s assets under management.