en
Back to the list

What you might be missing out on when it comes to Bitcoin’s institutional approach

Analytics

www.thecoinrepublic.com 02 September 2021 14:20, UTC
  
Reading time: ~2 m

  • The rising price of Bitcoin has quietly spurred an increase in institutional interest over the last few weeks. It’s hardly unexpected that there’s a rise in involvement right now
  • According to the CFTC COT report, leveraged or hedge funds have continued to amass additional short positions since the short-squeeze on July 26 (when Bitcoin rose from $35200 to $40550 in 24 hours)
  • Although the dilemma is a strong word, institutions may simply be setting themselves to cater and remain net-profitable regardless of whether the market is bullish or bearish

The rising price of Bitcoin has quietly spurred an increase in institutional interest over the last few weeks. It’s hardly unexpected that there’s a rise in involvement right now. Especially considering BTC’s value surpassed $50k before correcting, there were going to be some repercussions. According to data, CME Bitcoin Futures Open Interest has surpassed $2 billion once more. This is intriguing, especially because the market continues to consolidate in a sideways pattern. The market OI dropped to $1.5 billion yesterday as the value of OI was reshuffled due to the possibility of monthly contract expiration. However, there isn’t quite the same level of interest in Bitcoin now as there was in Q1 of 2021. Why? Because, well, institutions are still wary. When the categories are reviewed, the narrative becomes clearer.

According to the CFTC COT report, leveraged or hedge funds have continued to amass additional short positions since the short-squeeze on July 26 (when Bitcoin rose from $35200 to $40550 in 24 hours). Most hedge funds encourage this since they are striving to stay risk-averse in the market. The entire premise of hedge funds amassing short positions is that accredited investors are still considering a market breakout. To be fair, these might be exposure through CME or any other market to mitigate risks rather than direct short-bets against Bitcoin.

Although the dilemma is a strong word, institutions may simply be setting themselves to cater and remain net-profitable regardless of whether the market is bullish or bearish. Smart Money hasn’t highlighted a shift, implying that involvement has been minor. Asset managers seeking long-term gains, on the other hand, are net-long on BTC Futures. The negative premium of GBTC contracts, according to Arcane Research, is one plausible explanation for hedge fund short exposure. GBTC premiums have been negative across the market, regardless of price. This implies that Grayscale isn’t making any significant market moves either. As a result, while institutions are returning to Bitcoin, they are taking baby steps in terms of market positioning.


   Source
Back to the list