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Institutions Just Closed a Vast Majority of Their Bitcoin Short Positions: Data

  • Bitcoin is pushing higher after bottoming at $11,150 last week. The asset now trades for $11,650 as of this article’s writing.
  • BTC is trading above a pivotal support level as we come into the weekly candle close, which bodes well for bulls.
  • Institutions are responding to the price action by closing their shorts they opened via the CME’s Bitcoin futures market.
  • This comes after the CME reported that institutions were shorter on BTC than they ever have been.

Institutions Close Bitcoin Short Positions En-Masse

Last week, crypto data tracker “Unfolded” reported that institutional traders using the CME have opened the biggest number of short positions ever. Cumulatively, the  “institutional traders” on the platform had 3,119 BTC contracts open on the short side.

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Chart of BTC's price action since the start of 2018 with CME futures positioning from crypto data site/news aggregator "Unfolded" (@CryptoUnfolded on Twitter). Chart from TradingVIew.com

This is changing, though.

Unfolded once again shared data from the CME on August 30th. It shows that per the CME’s Commitment of Traders Report, which is released every week, institutions just closed 2,000 contracts worth of shorts.

What’s interesting is that this comes as the retail traders on the platform have closed a vast portion of their long positions on the Bitcoin futures contract.

The last time institutions closed this much of their Bitcoin shorts was during the move to the upside from the March lows to the recent highs, though it is unclear if the same trend will be seen again.

It’s important to note that this is the biggest shift in Bitcoin CME futures positions ever, suggesting there are many eyes on this market.

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Chart of BTC's price action since the start of 2018 with CME futures positioning from crypto data site/news aggregator "Unfolded" (@CryptoUnfolded on Twitter). Chart from TradingVIew.com

Macro Trends Favoring BTC

It isn’t clear why this shift is taking place, but there are trends favoring Bitcoin according to analysts. Mike McGlone, a senior commodity analyst at Bloomberg Intelligence, recently wrote the following on Bitcoin’s outlook:

“Stuck between 3-9x over the past few years, the price of #Bitcoin per ounce of #gold tilts the crypto toward resuming appreciation, if volatility history tells us anything. The Aug. 19 cross rate of 6x is the same as in 2017, yet Bitcoins’s volatility has dropped relative to gold.”

In terms of macro factors, the Federal Reserve’s Jerome Powell announced last week that the central bank may allow inflation to drift above 2%.

Fidelity Investments and other institutions in the cryptocurrency space are responding in kind by launching Bitcoin products to service this seemingly strong demand for the digitally scarce asset.

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Price tags: xbtusd, btcusd, btcusdt
Charts from Tradingview.com
Institutions Just Closed a Vast Majority of Their Bitcoin Short Positions: Data

Institutions Just Closed a Vast Majority of Their Bitcoin Short Positions: Data

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cryptohero8
I am a believer of the HODL philosophy because we are still in the nascent stage of blockchain technology. Although we are in a bear market now, my outlook on the adoption and growth of blockchain solutions remains unchanged. Blockchain transactions has been growing exponentially and demand for cryptocurrency like Bitcoin [BTC], Ethereum [ETH], Ripple [XRP], Litecoin [LTC] and other Altcoins will only continue to grow exponentially in the next five to ten years.

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