CME bitcoin derivatives traders had “paper hands” when BTC cracked $ 55,000

Bitcoin (BTC) derivatives traders on the Chicago Mercantile Exchange (CME) missed a staggering profit as BTC’s spot price topped $ 55,000 this week.

According to data shared by Ecoinometrics, retail investors reduced their long-term exposure to the Bitcoin futures and options markets in late September. The number of open short positions also increased, suggesting that derivatives traders were expecting the price of Bitcoin to decline, as shown in the chart below.

The data was taken on September 28th when the price of BTC on Coinbase fell below $ 41,000 – almost 23% less than its monthly high of $ 52,950. The decline comes after China’s decision to ban all types of cryptocurrency trading.

“Most likely, this decline was due to a combination of traders who did not move their long positions to the October contract and a full liquidation,” said Nick, an analyst at Ecoinometrics, “said Nick, an analyst at Ecoinometrics.

“No matter what, the big picture is that futures traders lack confidence.”

“It’s Paper Hand 101,” remarked the analyst.

Smart money

Institutional investors in the CME bitcoin futures market also tracked retail sentiment as they scaled back their long-term exposure to the market. On the other hand, however, their short positions escalated.

With CME options traders convinced that the price of Bitcoin was going to fall, it turned out that the number of bets – an implicit bearish bet on the Bitcoin price – was almost double the number of calls or bets on the Bitcoin. Price.

The position assignment of the traders makes $ 40,000 the most desirable actual price target.

On the flip side, some options traders are betting that the spot bitcoin price will hit $ 60,000 by the end of October. Also, analyst Crypto Hedger stressed that bitcoin options will expire on November 26th, showing that bulls’ sentiment is turning in Moved towards USD 80,000 has target.

Konstantin Anissimov, Chief Executive Officer of CEX.IO, said, “At this current rate of growth, Bitcoin has formed very strong support at a price of $ 50,000 and short-term traders might also need critical resistance around $ 56,000.

“A break below or above this level could trigger another massive price turnaround or a major rally towards USD 60,000 in the fourth quarter.”

Bitcoin supply is stifled

On-chain data shared by Ecoinometrics also shows higher Bitcoin withdrawals from all crypto exchanges.

In particular, the 30-day net exchange outflow of Bitcoin has increased since July 2020, as indicated in the color-coded graph below, with blue and red respectively representing outflows and a huge inrush current.

Ecoinometrics notes that the number of bitcoins currently leaving the exchange is higher than it was in the previous halving cycle four years ago.

Meanwhile, traders see a decline in Bitcoin supply on the exchanges combined with increasing “selling activity” as further catalysts for a liquidity crisis and more upside potential.

Related: Bitcoin’s “Heavy Breakout” fractal suggests that BTC price could reach $ 250,000 to $ 350,000 in 2021

“Back then there were indeed periods of net flows, but in terms of size they looked much less dramatic than they are today,” emphasized Ecoinometrics, adding:

“It’s another sign that we’re facing a liquidity crisis that could drive the value of Bitcoin much higher than it is now.”