Hedge Funds Position Themselves Bearishly on Bitcoin Futures
Recent data by the United States Commodity Futures Trading Commission (CFTC) analyzed by Kaiko, a blockchain analytics platform, reveals that hedge funds are taking a net short position across prominent BTC futures products on the Chicago Mercantile Exchange (CME).
This move indicates a sentiment that the upward momentum may have stalled as bulls failed to sustain the gains made on May 20.
Technical Analysis: Price Action and Possible Scenarios 📊
Looking at the price movement, although an uptrend is still in place, bears are threatening to erase the gains achieved earlier in the week. Buyers can only regain control if there is a shift in market sentiment among bulls, propelling prices above $68,000 and eventually $70,000.
- For bullish momentum to solidify, a breach of $72,000 is essential to overpower bears and surpass the all-time highs set around $74,000.
Hedge Funds’ Involvement in Basis Trade 💰
While hedge funds show a net short position in Bitcoin futures on CME, Kaiko believes this might not signal a straightforward bet against rising prices. Instead, the platform suggests that institutional investors are engaging in a “basis trade” strategy.
- Through basis trade, hedge funds are simultaneously shorting BTC futures contracts and taking long positions on spot BTC, aiming to leverage price disparities between the two platforms.
- This strategy serves as both a profit-making tactic and a shield against market volatility.
Bullish Sentiment Dominates Bitcoin Options Market
Despite the hedge funds’ cautious stance on Bitcoin futures, Kaiko’s options data indicates prevailing confidence in the market. As the month wraps up, it is observed that a significant portion of Bitcoin options trading volume revolves around contracts expiring on May 31 and June 28.
Options Volume Highlights and Strike Prices 📈
According to Kaiko, most of the Bitcoin options contracts concentrated on May 31 have a strike price of $80,000, with a total value of nearly $910 million. This indicates a widespread anticipation for BTC to surpass $80,000 by the contract expiry date.
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