CME Bitcoin derivatives traders had paper hands as BTC broke $ 55,000

[ad_1]

Bitcoin Derivatives (BTC) traders on the Chicago Mercantile Exchange (CME) missed incredible profits as the BTCspot price hit $ 55,000 this week.

Retail investors reduced their long exposure to Bitcoin futures and options markets in late September, according to data shared by Ecoinometrics. The number of open short positions also increased, indicating that derivatives traders were anticipating a decline in the price of Bitcoin, as shown in the chart below.

CME Bitcoin Derivatives Retail Traders. Source: CFTC report on merchant commitments, Ecoinometrics

The data was taken on September 28, when the price of BTC fell below $ 41,000 on Coinbase, down nearly 23% from its monthly high of nearly $ 52,950. The drop came in the wake of China’s decision to ban all kinds of crypto transactions.

Most likely, this drop is due to a mix of traders not extending their long positions until the October contract and outright liquidation as BTC appeared to fall below $ 40,000 last week, said Nick, analyst at Ecoinometrics.

Either way, the big picture is that futures traders lack conviction.

It’s Paper Hands 101, the analyst noted.

Smart money

Institutional investors in the CME Bitcoin futures market have also followed the sentiment of retailers by reducing their long exposure in the market. But, on the other hand, their short positions have climbed.

CME Bitcoin derived from smart money. Source: CFTC report on merchant commitments, Ecoinometrics

With CME options traders convinced that the price of Bitcoin was going to fall, the number of stakes on an implicitly bearish bet on the price of Bitcoin turned out to be almost double the size of calls, or bets on winnings. potential Bitcoin prices.

CME Bitcoin options put against open interest calls. Source: Ecoinometry

The allocation of traders’ positions made $ 40,000 the most sought after strike price target.

On the flip side, some options traders are betting that the Bitcoin spot price will hit $ 60,000 by the end of October. Additionally, Crypto analyst Hedger pointed out that Bitcoin options expiring on November 26 show that bull sentiment is biased towards the $ 80,000 target.

Buy / Sell volume in the last 24 hours for the Bitcoin options contract of November 26. Source: Laevitas, Crypto Hedger

At this current rate of growth, Bitcoin has formed very strong support at the price of $ 50,000, and short-term traders may also need to be careful of the key resistance level around $ 56,000, Konstantin Anissimov said, Executive Director of CEX.IO, adding:

A breakout below or above these levels can cause another cataclysmic price reversal or a massive run to $ 60,000 in the fourth quarter.

On-chain data shared by Ecoinometrics also showed a higher level of Bitcoin withdrawals from all crypto exchanges.

In detail, the 30-day Bitcoin net exchange flow has increased since July 2020, as shown in the color-coded chart below, with blue and red indicating extreme exits and entries, respectively.

Bitcoin slippery net exchange flow. Source: Coinmetrics

Ecoinometrics noted that the amount of Bitcoin currently exiting trading is higher than it was in the previous four-year halving cycles.

Net bitcoin exchange flow (second halving versus third). Source: Coinmetrics

Meanwhile, traders see the reduction in the supply of Bitcoins on the exchanges, along with the increase in hodling activity, as further catalysts of a liquidity crunch and rising prices.

Related: Bitcoin’s Heavy Fractal Suggests BTC Price May Reach $ 250,000 $ 350,000 in 2021

Back then, there were indeed periods of sharp releases, but in terms of size, they seem a lot less dramatic than what we have now, Ecoinometrics pointed out, adding:

This is another sign that we are on the right track for a liquidity crunch that could drive the value of Bitcoins much higher than it currently is.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move comes with risk, and you should do your own research before making a decision.

[ad_2]