Institutional Investment In Bitcoin (BTC) Futures Contracts Decline As Crypto Prices Correct

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Institutional investments in Bitcoin Futures reportedly declined over the past week, the U.S. Commodity Futures Trading Commission (CFTC) said in a report published on April 9.

The regulatory body’s analysis of the BTC futures contracts as offered on the Chicago Mercantile Exchange (CME) shows that at the time of the report on April 9, the drop involved both long and short positions.

According to the data presented in the summary, institutional investors and managers took up a total of 244 open long positions and 80 open short positions. This represents a drop of 71 and 9 respectively from those held a week earlier on April 2.

Additionally, institutional investors only had three open spreading positions, a decrease of 32 from the week before.

The overall BTC futures market experienced a significant drop as Bitcoin’s price corrected over April. The biggest impact, however, appears to have been on long positions compared to shorts. Long positions reportedly dropped 30 percent while shorts declined 11 percent.

The relatively high percentage drop on long positions is a critical indicator of how the overall bearish trend in the market can sway investor sentiment.

Institutional investors on the CME hold a significantly higher number of long open positions than shorts, the report shows regarding data taken from last week. That, however, isn’t true of overall open positions for the futures contract.

As per the CFTC report, open long positions on the CME total 3,267 while open short positions total 4, 177.

Comparatively, the total number of short positions jumped by 421 between April 2 and 9. Over the same period, long positions managed a slightly lower increase of 366.

The difference is also a pointer to the fact that a majority of the crypto market is still skeptical of bitcoin’s ability to sustain recent price gains. But even then, institutional investors apparently had more open long positions than shorts.

In particular, the previous week had seen an 88 percent increase in long positions, with institutional investors having opened 315 long contracts by April 2. The CFTC report also reveals that short positions decreased by 63 percent, dropping from 241 contracts to 89.

The CME reported last week that trading in its Bitcoin futures witnessed record volumes as of April 4, the very time Bitcoin’s price experienced a brief rally that saw it hit record highs in 2019 near $5,500.

Slight loses have however seen it hover just above the $5,100 range with minimal changes witnessed over the last few days.

The report on market stalling for the BTC futures contract on CME comes on the back of a mixed signal from Fundstrat’s Tom Lee. The Wall Street analyst and bitcoin bull noted last week that his sentiment gauge dubbed the “Bitcoin Misery Index (BMI)” had reached its highest level since 2016.

While it showed sentiment among enthusiasts was positive, Lee cautioned it presented a mixed signal: BTC could embark on a bullish trend or conversely fall due to a sell-off ignited by those seeking to take short-term profits.


Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.

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