DeFi sinks open interests in Bitcoin futures

The interest generated by decentralized finance (DeFi) has led to the collapse of open interests in Bitcoin futures.

The Bitcoin futures market has been one of the fundamental pillars of the crypto world in recent years. For many investors, it’s much more convenient to place their money in these derivatives, than to buy BTC or other cryptosystems directly. Therefore, today this market is bigger than the spot market of cryptoactive. Despite this, decentralized finance (DeFi) sinks open interests in Bitcoin futures.

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The importance of Bitcoin futures

Trading is one of the most important activities in the financial markets. This includes, of course, the crypto market, where there is a rich ecosystem of brokers and exchanges that allow users to exchange cryptomoney, obtaining a profit in the process. Being platforms like Binance, Huobi and SimpleFX the most known ones.

That’s why future contracts on Crypto Trader have become so important in recent years in the crypt world. Well, they would be the ideal vehicle for these institutional investors to invest in the crypt market, without having to directly acquire and maintain BTC in wallets.

However, not all investors are willing or able to carry out high frequency trading for profit. In many countries, laws prohibit institutional investors from putting their capital into assets such as crypto-currencies. This leads to these investment funds having to look for alternatives to enter the Bitcoin market.

YFI sinks the derivative market

This interest generated by Bitcoin futures, however, faces competition in another sector of the crypto market. In the last months, the decentralized finance or DeFi has experienced the biggest boom in its history. Increasing exponentially the value of the main protocols of the sector, and attracting the attention of investors.

Due to this, the value of open interests in the Bitcoin futures market has fallen. As revealed by Skew’s figures on the Chicago Mercantile Exchange (CME), the main platform for buying and selling futures on BTC.
DeFi sinks open interests in Bitcoin futures. Source: SkewDeFi sinks open interest in Bitcoin futures. Source: SkewDeFi: Skew

Thus, after having reached a historic record on August 17, with $948 million in open interest. This figure has fallen to $345 million, a 64% decrease that is also reflected in the value of open Bitcoin futures positions in all exchanges. It stands at $3.6 billion after a high of $5.7 billion.

This would graphically show the level of attraction that DeFi’s have generated over crypto investors. Diverting capital that would normally have been directed to the Bitcoin futures market. And concentrating them on the new sector in the making.