Interest In Bitcoin Futures Soars Amid Plunging Bond Yields
With bond yields plunging and the interest in Bitcoin futures rising, it’s underlining the correlation of an exodus of the traditional investment towards Bitcoin.
The Ten Year treasury is the most liquid and widely traded bond in the world, but with a yield of just 0.52% it’s leading many investors away.
Added with Bitcoin’s ascent, not just in price, but in public awareness, it can’t be a coincidence that each asset is trending the opposite way.
It can be argued now that traditional markets no longer offer a sound investment opportunity, and with Bitcoin rising in popularity again, and as millennials start to get older, a higher percentage of the population is realizing the potential of Bitcoin.
It’s no wonder, therefore, that we see a record rise in the Bitcoin futures market while the bond yields are slowly disintegrating.
Volatility and Bitcoin Futures Is Appealing in Uncertain Times
According to data from data analytics firm Skew, open interest in Bitcoin futures reached record highs of $5.6 billion last week, up from about $3 billion from only last month.
And it’s not only the more established exchanges, but all futures exchanges that are reporting higher levels of open interest in Bitcoin futures.
Matthew Dibb of crypto data firm Stack believes that ‘increasing open interest reflects the participation of institutional investors.’
With more long positions being snapped up in Bitcoin than ever, the bigger, more discerning traders are starting to be attracted by the opportunities Bitcoin’s volatility offers.
‘Traders with deep pockets are accumulating crypto long positions since traditional markets don’t offer any rewarding traders,’ said Dibb. ‘Add rising volatility and falling bond yields to this mix, and the crypto realm looks promising even to old-school traders.’
Negative Yielding Bonds Will Drive BTC Up
With traditional traders abandoning the legacy markets, it’s a natural transition towards Bitcoin futures.
Investors are always looking for the biggest opportunities. What’s more, with equities giving off an overbought signal, and bond yields getting more pointless by the day, it begs the question what will happen when bonds move into negative territory?
When that happens, it will be fuel for Bitcoin’s fire. And it’s not just in the US. Bond yields are at an all time low in every developed nation going, and as they all slide into negative territory, Bitcoin will likely be seen as a safe haven asset.
Why would anyone invest in ten-year bonds when they yield a negative return? They wouldn’t; it just doesn’t make sense, especially as there’s other assets that look more promising.
This will have a negative effect on the global economy, and governments will be inclined to up the printing press, which will likely push Bitcoin to new all time highs.
No doubt more money will go into gold, but it only takes a fraction of the money that goes into the gold market, to move the Bitcoin price significantly.
Bitcoin Offers Investors a Safe Haven
Bitcoin’s rise isn’t a surprise to anyone who’s been in the space for a while, and the mess the global economy is in, it’s hardly surprising the price and interest in Bitcoin futures is growing.
Ten-year treasuries were once the surest of investments, but as the slide into negative territory gets ever more real, investors are looking for something more promising, and dare I say it: safer.
Added with the millennials coming of age, like the previous decade the next one might just belong to Bitcoin.
Author: Pablo Clarke
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A Bitcoiner since 2017 and a Bitcoin Maximalist since 2018, Tommy is our main writer and editor at Bitcoin Maximalist. Other than researching and writing about Bitcoin, Tommy loves spending time with his family and supporting his beloved Leeds United.
