Institutional investment in Bitcoin Futures dropped over the last week, as the crypto markets experienced a price correction following their bullish run throughout the month of April.
According to a report published by the United States Commodity Futures Trading Commission (CFTC), institutional investment into the Chicago Mercantile Exchange (CME) for BTC-based futures contracts saw a steep decline. The report, which covers positions taken up to April 9th, revealed that institutional investors and managers held 244 open long positions on BTC futures, a decrease of 71 since the last report released on April 2.
Institutional investors also reported 80 open short positions, a 9 position decline from the week before. While the overall market for BTC futures saw a significant drop following Bitcoin’s price correction, long positions took a substantial hit relative to shorts. Among institutional investors trading on the platform, long positions dropped 30 percent versus 11 percent for shorts, giving some indication into the sway of market behavior for well-capitalized investors.
However, the move comes as a surprise to most analysts. While long positions declined more than shorts, it could be from general uncertainty into market conditions following crypto’s most recent rally. The data notes that institutional investors on CME, specifically, have more long positions opened than shorts, denoting that the “smart money” might believe in a continued rally beyond current Bitcoin prices. As a whole–including traders that don’t fall into the category of institutional or asset managers–CME has a greater number of BTC shorts open relative to long (4,177 vs 3,267).
In addition, the platform saw a greater jump in BTC-shorting positions following the most recent price rally, with Bitcoin shorts increasing 421 between April 2 and April 9, versus long positions that increased 366 over the same span. It’s unsurprising that shorts were on the rise following the massive leap in price for Bitcoin and the general cryptocurrency markets. Considering how coin prices languished all throughout 2019, leading many to label the last 12 months of trading as a “crypto winter,” investors are still skeptical over whether Bitcoin can hold its most recent gains.
For those shorting BTC, this past week’s price stalling is validation that the rally is over. However, for traders initiating long positions, we could be in the interim period of price correction, with the market responding to the profit-taking that occurs following a sudden jump in valuation. Analyst takes seem to run the spectrum of bullish to bearish market behavior, with some pointing to BTC as being at its most overbought positions since 2017. Other analysts see indicators for more price rally to come, with the largest crypto-resistance forming at $6000–the same mark where Bitcoin’s price plummeted in November 2018.
Regardless, 2019 continues to be a strong year for cryptocurrency relative to the last. Coin prices, across the market, are up double-digit percentage points, with certain currencies like Litecoin and Binance Coin posting over 200 percent in gains since the start of the year. Bitcoin’s most recent price rally, which took the coin close to $5500, has brought renewed life to crypto interest and investment. Given the adoption multipliers on the horizon, in the form of Facebook Coin and JPM Coin, the crypto markets could be on a stepping stone to a much greater valuation.