Bitcoin: CME hedgers update record net position

The Commodity Futures Trading Commission (CFTC) COT (Commitments of Traders) reports for the week ending on Tuesday last week showed:

Large speculators (NON-COMMERCIAL) decreased their net sell position on bitcoin contracts by 0.02k to 2.08k. This slight decrease came after a sharp rise in the net position a week prior. Since the start of November 2021, the net position has been steadily declining from its peak.

Hedgers (COMMERCIAL) boosted their net buying position in bitcoin contracts by 0.14k contracts to 1.13k, following a sharp rise the week before. This marks the second consecutive week of record highs in CME futures trading (since December 2017).

Small speculators (NONREPORTABLE POSITIONS) decreased their net purchase of Bitcoin contracts from 0.16 thousand contracts to 0.94 thousand. This decrease in net buying position follows a 3-week period of accumulation. The net position had reached record highs in the history of futures trading on the CME, but has since begun to decline.

The open interest decreased by 1,820 contracts, bringing the total to 17,010.

The ratio of the number of sell contracts to the number of buy contracts for the bearish index of large speculators stayed the same over the week, staying at 1.16.

The COT data for Bitcoin shows a slight rise in bullish sentiment among large speculators. Large funds have decreased both selling and buying, resulting in a slight decrease in the net position of BTC. This has caused the net position to drop from its highest levels in the past 20 months. If this trend continues, it could potentially lead to an increase in the value of the cryptocurrency.

Hedgers who are looking at the long-term outlook are increasingly pessimistic about cryptocurrencies. For two weeks in a row, they have set a new record for the highest net short position.

The all-time record net position on BTC growth has seen a decrease as small speculators have started to reduce their holdings. Although bearish sentiment has increased among smaller traders, this group typically does not have a major effect on the market.

The data from the previous report may be skewed due to the monthly expiration of futures. Therefore, the data from the upcoming report, to be released in a week, will be more indicative.

BTC

COT report data is essential for medium and long-term trading, and is mainly used by large speculators, NON-COMMERCIAL (banks, investment funds). These traders usually follow the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, have little influence on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually go against the trend (black line). The net position is the difference between the number of buy and sell contracts, while open interest is the total of all open positions in the market.