The institutional herd is here: Bitcoin volume on CME, LMAX hits new records

Published at: Jan. 5, 2021

The daily volume of the CME Bitcoin futures market and LMAX achieved a new all-time high on Monday. The data shows that institutional demand for Bitcoin (BTC) is rapidly surging as major public funds continue to accumulate.

Institutional appetite for Bitcoin is accelerating

According to analysts at Arcane Research, the daily volume of LMAX Digital reached a record-high at $2.62 billion.

LMAX is a trading platform that tailors to institutional and accredited investors, unlike retail-focused platforms such as Coinbase and Binance. Arcane Research’s head of research, Bendik Norheim Schei, wrote:

“Want another ‘Institutional investors are here’ chart? Here's the daily volume on the institutional platform LMAX Digital. New all-time high volume of $2.6 billion yesterday.”

During the same period, the CME Bitcoin futures market also achieved an all-time high volume at $2.7 billion in dollar terms.

On CME, traders use Bitcoin-backed contracts, and as such, when the price of Bitcoin increases, so does the value of contracts.

The massive increase in the trading volume of institutional platforms comes as funds are aggressively investing in Bitcoin.

On Monday, Anthony Scaramucci, former White House director of communications, said his hedge fund, SkyBridge, entered a $300 million Bitcoin position from November 2020 to December 2020. He said:

“We @SkyBridge entered the #bitcoin market in Nov/Dec with a now ~$300mm position, and today launched a #bitcoin fund offering for accredited investors. We believe we’re in the early innings of a new asset class with tremendous upside.”

With SkyBridge’s investment in Bitcoin, nine funds now hold $23 billion worth of Bitcoin, according to technology researcher Kevin Rooke.

9 funds now hold over $23 billion of Bitcoin. pic.twitter.com/sfffwYK4oA

— Kevin Rooke (@kerooke) January 4, 2021

Grayscale still holds the most Bitcoin at $19 billion through its flagship product, Grayscale Bitcoin Trust.

GBTC is an alternative to an exchange-traded fund in the United States in that institutions and accredited investors can gain exposure to Bitcoin through a strictly regulated vehicle.

What’s next for BTC?

Despite the massive inflow of institutional capital into the Bitcoin market, the price of BTC sharply corrected on Tuesday.

Bitcoin's price dropped by over 15% on a single day after more than $2 billion worth of futures contracts were liquidated.

Ki Young Ju, CEO of CryptoQuant, said that derivatives traders are now uncertain and fearful, based on the declining leverage across major exchanges. He said:

“This indicator is better than the Fear & Greed index. $BTC derivative traders are uncertain about the next move, and scared.”

Estimated Leverage Ratio across exchanges is decreasing.Chart https://t.co/5cT9wVNv16 pic.twitter.com/m2emoxL1fK

— CryptoQuant.com (@cryptoquant_com) January 5, 2021

In the near term, this could result in a consolidation period where Bitcoin sees lower volatility following a massive uptrend.

In the last 48 hours, Bitcoin has still been able to remain above the $30,000 support level, which is an optimistic sign of positive momentum.

Whale clusters suggest that the next major support area is $29,300, which would be a crucial technical level to defend for the ongoing rally to see renewed momentum.

Tags
Bitcoin
Bitcoin Price
Markets
Bitcoin Futures
Investments
Grayscale
Cme
Bitcoin Investment Trust
Related Posts
'Pay attention' — Grayscale adds 18x the Bitcoin mined supply in one day
Asset manager Grayscale added 18 times more Bitcoin (BTC) than miners added to the supply in just one day on Jan. 18. As various data sources confirm, Grayscale, which remains the biggest institutional buyer in the Bitcoin space, purchased a total of 16,244 BTC ($607 million) on Monday. BTC buys accelerate again The giant sums are some of the biggest on record and are an order of magnitude above what even Grayscale was attempting just last week. The company previously saw daily buys but stopped over the holiday period and reduced its allocations in the first week of the new …
Bitcoin / Jan. 19, 2021
Grayscale's Bitcoin premium has dropped to record lows below zero
Grayscale Bitcoin Trust ($GBTC) is currently the largest listed cryptocurrency asset with $30.17 billion in assets under management. The firm currently holds more than 655,730 BTC and the security is tradable in the United States through over-the-counter markets. How is GBTC different from a Bitcoin ETF? The fund was launched in 2013 and the Grayscale Bitcoin Trust became the preferred institutional vehicle in the U.S. for BTC due to the lack of a Bitcoin exchange-traded fund (ETF). Investment trust funds are regulated by the U.S. Office of the Comptroller of the Currency (OCC) and they are designed exclusively for accredited …
Etf / Feb. 27, 2021
Bitcoin held by public companies has surged 400% in 12 months to $3.6 billion
Technology researcher Kevin Rooke has been tracking the Bitcoin (BTC) holdings of public companies throughout the past two years. According to Rooke, public firms now hold over $3.6 billion worth of BTC. In 2019, public companies had merely 20,000 BTC on their books. This figure has increased to 105,837 BTC in 12 months. Rooke said: “Last year, public companies held fewer than 20,000 BTC on their balance sheets. Today, 19 public companies hold 105,837 BTC on their balance sheets, valued at over $3.6 billion.” Today, MicroStrategy is the biggest Bitcoin holder, with 70,784 BTC, and GalaxyDigital Holdings is a distant …
Bitcoin / Jan. 27, 2021
$2.3B in Bitcoin exchange outflows dwarfs the amount of new BTC mined
From Oct. 15 to Nov. 15, Bitcoin (BTC) exchange outflows dropped from 2.5 million to 2.355 million, the lowest levels since August 2018. Approximately 145,000 BTC, worth $2.35 billion at a price point of $16,200, moved out of exchanges. In the same period, Bitcoin miners mined around 27,000 BTC, equivalent to around $437.4 million. Since miners have been mining 900 BTC daily after the May 11 halving, 900 BTC times 30 days equals 27,000 BTC. This aggressive accumulation trend seen in the Bitcoin market shows that investors anticipate a prolonged post-halving uptrend. Why declining Bitcoin reserves is bullish A block …
Bitcoin / Nov. 16, 2020
Institutions increase exposure to Grayscale Bitcoin Trust as GBTC discount nears 30%
Institutional investors are returning to accumulate Grayscale Bitcoin Trust (GBTC) shares as the discount to spot price his risen to nearly 30%, data on Glassnode shows. Since December 2021, some weekly sessions saw investors pouring in between $10 million and $120 million into Grayscale's flagship fund. Meanwhile, the biggest capital inflow — amounting to nearly $140 million — appeared in the week ending on Feb. 25, as shown in the chart below. No selloff yet among high-profile GBTC backers The GBTC trust attracted investments as global markets faced back-to-back shocks in the past few months, including a dramatic selloff in …
Etf / March 6, 2022