Institutions Increase Short Exposure to Bitcoin Futures Amid Uncertainty
- Bitcoin’s price action has been weak over recent weeks as uncertainty has spread about all markets.
- From the local highs, the cryptocurrency is down nearly 20%.
- Institutional traders on the CME have increased their short exposure to Bitcoin futures over recent weeks.
- The metric is not down a lot but it shows that there are some investors hesitant about what’s to come.
- Retail investors using the CME have also increased their short exposure to Bitcoin futures, data shows.
- Despite this, analysts believe that the prevailing long-term trend for BTC is a bullish one.
Bitcoin Is Primed to Move Lower, Predict CME Futures Traders
Bitcoin’s price action has been tepid at best over recent weeks. The cryptocurrency has been trapped in a $1,000 range between $10,000 and $11,000, constantly finding rejection at the upper boundary and support at the lower boundary.
Last week, BTC slipped as a result of a confluence of fundamental events: BitMEX was charged by the U.S. CFTC over derivatives and anti-money laundering violations and President Trump caught the disease currently spreading across the globe.
Bitcoin traders are reacting to this news negatively, data shows.
Crypto data aggregator Unfolded shared the chart below, which cites data from the CME’s weekly Commitment of Traders Report. The report indicates that over the past week, both retail and institutional traders on the CME have increased their downside exposure to Bitcoin. The aggregate balance of institutional traders on the CME is currently short while the aggregate balance of retail traders is currently long.
Chart of BTC's price action since the start of CME futures history with CME futures positioning data shared by crypto data aggregator Unfolded. Chart from TradingView.com
This is similar to a trend seen on other Bitcoin futures exchanges that are more retail-focused.
Crypto derivatives tracker ByBt reports that nearly all leading BTC futures exchanges have negative funding rates. The funding rate is the fee that long positions pay short positions to ensure that the price of the future stays around the value of the underlying spot market. Negative funding rates during consolidations suggest that shorts are more strongly positioned than longs.
Prevailing Trend Is Bullish
While investors are betting on a short-term correction, analysts say the prevailing trend is bullish.
As reported by Bitcoinist previously, leading on-chain analyst Willy Woo recently said:
“Meanwhile the on-chain fundamentals are showing more new investors are coming in than the mania phase of the last cycle (Dec 2017), without it reflected in price. This is because the unfettered trading games on derivative platforms is holding the price down.”
Pure fundamentals, like macroeconomic trends, are also lending to BTC growth.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Institutions Increase Short Exposure to Bitcoin Futures Amid Uncertainty