BTC Futures: Bear Population in Decline

BTC Futures: Bear Population in Decline

Short positions for Bitcoin (BTC) futures are on the decline, according to the latest report by the U.S. Commodity Futures Trading Commission (CFTC)

On August 24, CFTC published a Commitment of Traders report for the week ending on August 21. The report shows that the net position for non-commercial contracts of BTC futures totaled to -1266, the all-time low recorded by CFTC. This means that, while the market is still short, there are only 1266 more short positions, which is the smallest difference there has ever been. This data implies that the end of the bear market can be just around the corner.

Commitments of Traders — Futures Only, August 21, 2018

Here’s CME Futures open interest of large holders. [As of] April, you’re starting to see a big increase… about an 85 percent growth rate. If you extrapolate that out, by February 2019, you’re going to have a very robust market here

Brian Kelly, crypto analyst at CNBC

Quick reference on BTC futures

A BTC futures contract is an agreement where Party A agrees to buy a specified number of BTCs from Party B on a specified future date at a specified price. However, BTC futures contracts do not specify parties, which means they can be easily traded. BTC futures were first introduced by CME and CBOE exchanges in January '17.

The launch of BTC futures is blamed by some to have caused the January plunge. They believe that BTC futures compromise market integrity by opening possibilities for market manipulation. The opposing view adduces arguments such as that there is not enough open interest; the trading volume is not sufficient; and margin requirements are too high to offer enough leverage to incentivize market manipulation.

Related news

US regulation against Bitcoin could be the catalyst for the next upswing

In a recent briefing held by the U.S. Secretary of the Treasury Steven Mnuchin, the American government revealed its stance on cryptocurrencies and the efforts it will carry upon to regulate Bitcoin because of its use in criminal activity and the threat it poses to the financial system. “This is indeed a national security issue,” Sec. Mnuchin said on the need for more regulation in the crypto space. “We will not allow digital asset service providers to operate in the shadows.” https://t.co/03CEzStDZE pic.twitter.com/zykiOLkm96 — Bloomberg Crypto (@crypto) July 15, 2019 Yet BTC surged 4.5 percent after the statements were made by the U.S. government official, which according to the head analyst at Fundstrat Global Thomas Lee, could be a sign of confidence about the underlying fundamentals behind BTC that allow it to function in a decentralized way without the need of regulatory oversight. Bitcoin seems comfortable with statements made by #Mnuchin regarding Crypto and KYC/AML. – White House wants fair ground rules but does not seem intent on further action at this time. – $BTC rise shows market comfortable with this Cc: ⁦@stevenmnuchin1⁩ pic.twitter.com/muHV1RFoxK — Thomas Lee (@fundstrat) July 15, 2019 Although the news comes at a time when  Bitcoin has retraced 25 percent from the high of $13,200 on July 10, it could be the catalyst for a further upward advance. Bitcoin Technical Analysis As it was foreseen, the break below the 23.6 percent Fibonacci retracement zone on the 3-day chart led to a drop-down to the 38.2 percent Fibonacci retracement level and the support trendline, which are both acting as barriers containing the price of Bitcoin from continuing depreciating due to the high concentration of demand around this area. Even though these two major support clusters could be able to hold and bounce off BTC’s market valuation back to the 23.6 percent Fibonacci retracement point or higher, moving below them could take this cryptocurrency to the next level of support around $8,500 and $7,240. TradingView: BTC/USD A similar scenario is presented on the 1-day chart where an ascending parallel channel has been developing since mid-December 2018. Now that Bitcoin reached the bottom of the channel, a rebound to the middle or even the top of the channel could be expected. However, due to the longevity of this ascending parallel channel a break below it could accelerate the selling pressure behind BTC significantly dropping its price down to at least the 50 percent Fibonacci retracement level as it can be seen in the 3-day chart. TradingView: BTC/USD Overall Sentiment Despite the sharp downturn that Bitcoin experienced over the last week that took many analysts by surprise including Tone Vays who turned bearish less than 24 hours after becoming bullish, there are multiple signs that could be predicting a rebound to previous or even new highs. Related: Donald Trump: Bitcoin not money, value based on thin air, facilitates unlawful behavior The criticism that Bitcoin has faced in the last few days following President Trump’s derisive tweet about it does not seem to affect the potential this cryptocurrency has and could represent a pivot point since more Americans will become aware of its existence. As it can be seen on the 3-day chart as well as in the 1-day chart everything seems to point out that BTC could soon regain at least 20 percent of its value within the next few days. Regardless, investors must pay close attention to the 38.2 percent Fibonacci retracement level because if it fails to hold the price of this cryptocurrency it may take it back to $8,500 or lower.   It is worth noting that even with the few corrections that Bitcoin has gone through since it started surging in early February, in the long-term this cryptocurrency remains bullish. In the 1-month chart, for instance, the MACD recently had a bullish crossover, the Parabolic SAR positioned itself below the price of BTC, and the TD Sequential Indicator is on a green five out of nine. Thus, traders must be aware that trading against the bigger trend poses an extreme risk. TradingView: BTC/USD The post US regulation against Bitcoin could be the catalyst for the next upswing appeared first on CryptoSlate.
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