Declining Bitcoin Open Interest on CME Suggests Further Pain for BTC Price: Bitfinex

Bitcoin (BTC) has continued its downtrend, reaching new local lows of under $59,000. During the mid-hours of the United States Monday trading session, BTC briefly fell below $60,000 to register a new local low of $58,500.

This slump has persisted as outflows from the U.S. spot Bitcoin exchange-traded fund (ETF) market have continued into the new week.

The latest weekly report from the crypto exchange Bitfinex revealed that U.S. spot Bitcoin ETFs lost over $100 million each trading day last week, amounting to $544.1 million in collective outflows. Analysts at the trading platform said the outflows are a combination of weak-handed ETF investors reacting to short-term negative news and basis/funding arbitrage unwinding due to negative funding rates.

Bitcoin Open Interest Declines

According to Bitfinex, one of the signs of the unwinding of basis/funding arbitrage is the steep decline in Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) and other trading platforms.

The open interest on the CME fell by $220 million in the past week, with the overall aggregate open interest across other platforms slumping by more than $450 million within the same timeframe. The plunge has brought the total Bitcoin futures open interest down from the June 7 record high of $36.99 billion to $33.3 billion.

“This reduction in OI coincides with negative funding rates observed across several exchanges over the past week and corresponds with the ETF net outflows, suggesting a substantial unwinding of the funding arbitrage trades linked to ETF flows. Given this, it is important to acknowledge that not all ETF outflows should be interpreted as direct spot selling,” stated analysts.

Bitcoin Could be Nearing Its Bottom

Citing the last Bitfinex Alpha report, analysts predicted that BTC could be nearing its bottom, as heavy ETF outflows, like those being seen, often correlate with the formation of local bottoms.

When BTC dropped below $70,000 in early June, U.S. spot Bitcoin ETFs recorded seven consecutive days of net outflows, highlighting the effect of sharp price movements on ETF investors’ sentiment.

“This pattern is critical for investors to monitor as it often provides clues to potential reversals or stabilization points within the market,” analysts noted.

Meanwhile, Bitfinex analysts have warned that market sentiment remains bearish, as there is a weakness in the lower timeframe range (one-minute to 15-minute charts) across crypto assets.