Hedge Funds Are Net Short On Bitcoin Futures Even As BTC Bulls Take Over Options Markets

There may be nothing for Bitcoin holders and merchants to put in writing a lot about costs in latest days. Though there was pleasure after Could 20, the coin has been printing discouraging decrease lows, cooling off from the spectacular $71,900 zone to lower than $68,000 at press time. As BTC drops 7% from this week’s excessive, hedge funds seem like exiting.

Hedge Funds Are Shorting Bitcoin Futures On CME: Are They Actually Bearish?

In keeping with Kaiko, a blockchain analytics platform, the newest information from the USA Commodity Futures Buying and selling Fee (CFTC) displaying Dedication of Merchants (COTs), reveals that hedge funds are internet quick throughout main BTC futures merchandise on the Chicago Mercantile Change (CME).

This improvement may recommend that the “large boys” suppose the uptrend is over now that bulls didn’t comply with via this week, confirming positive factors of Could 20.

Bitcoin price trending downward on the daily chart | Source: BTCUSDT on Binance, TradingView
Bitcoin worth trending downward on the every day chart | Supply: BTCUSDT on Binance, TradingView

worth motion, the uptrend stays, although bears threat peeling off all positive factors early this week. Technically, patrons have an opportunity provided that there’s a shift in tune amongst bulls, pushing costs ideally above $68,000 and later $70,000. From the every day chart, patrons should breach $72,000 if they’ve any likelihood of conquering bears and breaching all-time highs printed at round $74,000.

Hedge funds shorting BTC futures on CME | Source: Kaiko
Hedge funds shorting BTC futures on CME | Supply: Kaiko

Whereas the USA CFTC COT report factors to a internet quick place for hedge funds in Bitcoin futures on CME, Kaiko additionally thinks it may not be an easy guess on costs to tank. As a substitute, the blockchain analytics platform believes institutional buyers have interaction in “foundation commerce.” This technique exploits arbitrage trades, capitalizing on worth variations on spot and future platforms. 

Being “internet quick” on CME means hedge funds are probably “lengthy” on their foundation commerce. This implies they’re concurrently shorting BTC futures contracts and doubling down on the spot BTC. The objective right here shouldn’t be just for earnings but additionally to create a buffer, a hedge in opposition to risky costs. 

BTC Bulls Dominate The Choices Market

Nonetheless, confidence stays excessive based mostly on the choices information shared by Kaiko. Because the month involves a detailed, Kaiko notes that the majority Bitcoin choices quantity is closely targeting contracts expiring on Could 31 and June 28. Most of those choices contracts are “calls,” that’s, merchants anticipated costs to rise earlier than expiry. 

BTC options volume by expiry | Source: Kaiko
BTC choices quantity by expiry | Supply: Kaiko

Kaiko notes that the very best quantity strike worth for BTC contracts expiring on Could 31 is $80,000, with a notional worth of practically $910 million. Extrapolating from this, most merchants anticipated BTC to surge above $80,000 by the top of the month. 

Characteristic picture from Canva, chart from TradingView