• Bitcoin tries to approach USD 10,000 with a USD 9,866 daily high so far
  • Bitcoin outflows from mining pools to crypto exchanges hit a record low, suggesting a hoarding pattern is emerging
  • Open interest in CME Bitcoin futures continues to break new records

Friday is running out of time for Bitcoin bulls to push price towards the desired five-figure territory of USD 10,000 and it does not look right now like it will happen, as price dropped to a low of USD 9,200 in profit taking, after a high of USD 9,866 (CoinDesk).

Nevertheless, signs are looking good from many other angles, with some metrics suggesting that miners could be up to old hoarding habits after all, meaning to say they’re confident that price could be going up higher and willing to wait out to make more profits when prices are better, according to analysis from CoinDesk’s First Mover newsletter.

For example, South Korean analytics company CryptoQuant produced some charts that show a declining outflow of crypto from mining pools, which are an aggregate of computing power that try to increase their chances of finding Bitcoin blocks and then sharing out any revenues to the pool participants. F2Pool, for example, the Beijing mining pool that is now over 17% of the total computing power dedicated to the Bitcoin network, saw only 139 BTC outflow this week, its smallest number in almost half a year. And from there, only 29 BTC was transferred to crypto exchanges, the smallest total in at least 12 months.

By itself, the data shows a willingness for mining pools to wait out current market levels, but of course, analysts say that the implication on prices is less simple to relate to. While it might be that miners are predicting a huge price rally down the road, it could also be a question of psychology.

Simply put, miners might be concerned that selling now could be seen as a display of weakness — selling could trigger further liquidations from the market, causing a domino effect that would crash prices. Since mining pools are generally the biggest senders of crypto to exchanges, theirs is the impact most felt.

Traditional markets also see central banks try to maintain this precarious balance each time they try to intervene in currency markets or build up foreign reserves. The Indian central bank, for instance, might find it easier to buy US dollars when the Indian rupee is strong and trending higher. On the other hand, buying dollars when the rupee is weak only serves to further undermine its own fiat.

Meanwhile, less than a week after the Bitcoin reward halving on Monday, investor interest in Bitcoin derivatives, such as options listed by the Chicago Mercantile Exchange (CME) has hit fresh peaks, suggesting that even speculators are thinking that Bitcoin’s scarcity mechanism at work could push demand ever higher.

On halving day, daily options trading volume on the CME jumped to USD 17 million, almost doubling the previous all-time high at USD 9.9 million set on 6 May 2020, according to data from crypto derivatives data company Skew. Volume has even continued to grow since that high, with this week seeing a new record of USD 40 million, when it was only USD 1.7 million the week before.

Since options are derivative contracts which give the buyer the right to buy or sell the underlying asset (Bitcoin in this case) at a predetermined price on or before the specified date, many do exchange hands before contract expiry, but with volatility on the rise, interest in these contracts are also higher, with CME seeing more than 270% increase in open interest over the last seven days.

This number of outstanding positions hit consecutive record highs on Tuesday, Wednesday, and Thursday this week, closing yesterday with USD 142 million in open positions.

 

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