RE: BTC - Bakkt volumes see yet another all time high!
It's great to see more good developments from Bakkt.
Though I do have one interesting comment that I'd like your thoughts on, since you're always good at giving brief, but very meaningful commentary on what's going on:
The author's statement is absolutely false. This is because;
1) Open interest has no correlation to institutional buy accumulation. This data tells you nothing about who may be buying and holding Bitcoin. All it tells you is that more volume is trading. Could be more short bets, more long bets or hedging. To make the leap that institutional investors are buying Bitcoin, investing in and holding it is wrong.
2) An increasing open interest while price is falling is a BEARISH indicator. This is TA 101, falling prices accompanied by an increase in volume is negative for price. Somehow this author wants you to believe the opposite.
I've recently started doing analysis for cryptos, though currently predominantly Bitcoin, on Seeking Alpha. That comment was left behind on my recent article regarding BTC's correction to sub-$7,000. I've already commented, showing the correlation between BTC's subsequent rebound and Bakkt's new high volumes, as you've explained it here.
I believe this person hasn't understood yet. I was just curious to know how you'd respond to this comment, as you've clearly been doing analysis longer than I have, o' wise one.
No matter how you slice it, increasing open interest means more money coming into a contract. Whether that is institutional or not is up for debate, but look who is allowed to trade the Bakkt contracts... are you able to? I know I am not... As far I understand those contracts are only open to institutions which means increasing open interest very likely means increasing institutional involvment. Whether they are buying and holding is another topic entirely, and wasn't exactly what I was saying. The point was that they are participating more, whether on the long or short side doesn't really matter, the fact that they are participating at all is what matters.
I'd have to read your post to really get an idea of what you were claiming from the data.
Ah, thanks for your thoughts, mate. According to my analysis, I proclaimed that increased open interest shows a greater involvement by institutions unto Bitcoin, however I did mention "accumulation", which may have been a mistake since the data didn't actually make clear whether they're going long or short.
So, I may make some more careful conclusions in future analysis, as I may have gotten a tad too excited from Bitcoin's strong rebound. Nevertheless, I did make some clarifications in the comments of said analysis.
In any case, thanks so much for the explanation :-)
On a side note, I have noticed that high open interest on strikes that are out of the money (or a ways away from the current market price) tend to pull prices towards those strikes, though not always. But sometimes...
Ah, another interesting point to note as well. Thank you.