‘Bitcoin Big Short’: Is Increasing Shorts on BTC Futures at CME a Bullish Signal?

Bitcoin rose from trading around $4000 in March 2019 to nearing $12000; a 3x Rise in less than 90 days. While the speculation of a bubble is behind us, a growth of this proportion for an investment asset is highly unstable. Reportedly, Hedge funds and big traders are betting short on Bitcoin Futures market.

The reports from the futures market can be a reliable source to understand the market statistics given the large volume of trading on CME.

According to a report from the CFTC, last week the bears held 14% more short position than the bulls. The media reported,

“Other reportables” — a loose category of firms that don’t necessarily manage money for outside investors — held more than three times as many short positions in bitcoin futures as long ones”

It can be a response in the apprehension of a significant pullback. Since its upward momentum began in May at around $5000, Bitcoin has had only one weekly withdrawal. Most of the other times it has broken through resistance, consolidated for a while and then another leg up.

Moreover, even the short orders could have been placed as a hedge against Bitcoin custody. An entity going long on Bitcoin with a tremendous amount of buy orders could look to hedge part of their investment by shorting it on futures Exchanges.  This is highly bullish given Bitcoin [BTC] is an entirely new and uncorrelated asset.

Small volume traders are reportedly long on the asset. It is like a contradiction between the two sides. While the likelihood of either of it happening can be put to a long debate. Because while the rise could be categorized as unstainable, it could trigger another short squeeze. Harry Hey from Binary Financial tweeted,

Bitcoin about to break $12,000 $BTC – short squeeze is on the way 😎

Bitcoin futures chart
BTCJUNE Futures/USD Daily Chart on CME (TradingView)

Bitcoin has been gaining at a rate of $500 daily in the week. Large definite gaps in the futures market are massive; this is usually brought due to weekend trading of the asset. Moreover, the bullish move has also been outstanding.

The CME Bitcoin Futures June contract price touched a high of $12145. The June contracts will expire by the end of this week on 28th June 2019. Interestingly, the Jule contracts are available at a price above $12,300 at press time.

BTC Futures
Bitcoin Futures Contact Price Table at CME (Source)

Hence, while the market is split and not many analysis techniques apply to Bitcoin at this moment, caution must be exhibited. Even if Bitcoin is going for the moon, massive pullbacks will be part of the run. It should not worry ‘Hodlers,’ who have significantly larger price targets. However, day traders and altcoins traders might be currently in the dark.

Where do you think the price is headed next? Please share your views with us. 

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