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.

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What impact will Bakkt’s bitcoin futures have on the BTC price?

Bakkt’s long-awaited Bitcoin futures contracts are finally live. Even though Bitcoin has not experienced the volatility that it was expected, some of the most prominent analysts in the cryptocurrency industry believe that it may be a matter of time. Bakkt Bitcoin futures Bakkt, a subsidiary of the Intercontinental Exchange (ICE), announced that as of 00:02 UTC Sept. 23 the first physically-delivered Bitcoin futures contract was executed at a price of $10,115, marking the launch of its much-anticipated platform. Unlike other BTC futures contracts in the market like the Chicago Mercantile Exchange (CME), which is only settled in cash, Bakkt Bitcoin futures is settled using real Bitcoin at contract expiry. The firm is the first “federally regulated exchange” to offer Bitcoin trading services, according to Bakkt CEO Kelly Loeffler. This could allow more regulatory clarity into the industry by creating a scalable infrastructure that subsequently triggers conservative investors who have been waiting in the sidelines into adding Bitcoin into their portfolios, said James Putra, head of product strategy at TradeStation Crypto. Thus far, 28 BTC worth approximately $280,000 have already been invested into Bakkt’s monthly contracts. Although its initial volume is not what many analysts in the market were anticipating, Su Zhu, CEO of Three Arrows Capital, believes that investors could soon pour in massively. “Bakkt will be likely first a trickle and then a flood. The reality is that most regulated futures contracts get low adoption on day 1 simply because not all futures brokers are ready to clear it, many people want to wait and see, the tickers are not even populated on risk systems, etc,” stated Zhu. It is worth noting that the Chicago Mercantile Exchange (CME) Bitcoin futures contracts traded $460 million on its first week. In May this year, the CME set a record of 33,677 contracts traded on a single day, worth over $1.3 billion dollars. As Bakkt’s new trading instrument matures, the more substantial its share of Bitcoin’s trading volume will become, implied Adam Back, CEO of Blockstream.  Back said: “Bakkt adding a new way to buy Bitcoin, adds a regulated market more institutions can use. but we won’t really “find out tomorrow” as it takes time for companies to setup accounts, decide trading strategies & for volume to build. Recall CME futures open vs today’s growing volume.” The crypto-settled Bitcoin futures contracts that Bakkt is introducing into the space could be the catalyst that takes cryptocurrencies into the mainstream, bringing institutional capital and liquidity into the space, said @Rythmtrader. However, its launch does not seem to have had the impact in Bitcoin’s price to take it out of the consolidation phase it entered after nearly reaching $14,000 on June 26. Bitcoin technical analysis For over the last three months Bitcoin has been consolidating, which has led it to form a symmetrical triangle on its 1-day chart. This technical formation represents a period of consolidation before the price is forced to break out in a positive or negative trend. A move above the upper trendline marks the start of a new bullish trend. Meanwhile, a move below the lower trendline indicates the start of a new bearish trend. By measuring the distance between the initial high and low, the symmetrical triangle predicts a 34 percent target in both directions. Due to the opposing views that the symmetrical triangle presents, the Fibonacci retracement indicator can also be used to confirm the different price levels that could lead to a breakout of the pattern. A break above the 23.6 percent Fibonacci retracement area ($11,300) could result in an upswing that takes BTC up to $13,750. Conversely, a move below the 38.2 percent Fibonacci retracement zone ($9,730) could lead to a breakdown of the pattern that takes Bitcoin to test the 65 percent Fibonacci retracement zone, $6,500. Despite the tepid impact that Bakkt’s Bitcoin futures contracts launch has had in Bitcoin’s price, it will certainly improve the trust that institutions will now have about the cryptocurrency market, according to Thomas Lee, the head of research at Fundstrat Global Advisors. VanEck-SolidX recently set in motion a version of their originally planned Bitcoin ETF that has accumulated an underwhelming $41,000 since launch. As a result, it remains to be seen if Bakkt is actually able to trigger an influx of capital into the market that allows Bitcoin to reach new yearly highs as trading volume increases. The post What impact will Bakkt’s bitcoin futures have on the BTC price? appeared first on CryptoSlate.
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Bitcoin Trading on ICE’s Bakkt Futures Platform Breaks $290,000 Barrier

Coinspeaker Bitcoin Trading on ICE’s Bakkt Futures Platform Breaks $290,000 BarrierEarlier today, Bakkt announced the live trading for its much-awaited Bitcoin Futures contracts. Bakkt Bitcoin Futures Contracts come with daily and monthly settlement periods along with its safe custodial solution called the Bakkt Warehouse.Bakkt Bitcoin Futures are now actively trading on ICE Futures U.S., while the Bakkt Warehouse continues to onboard bitcoinWe take our customers’ trust seriously, and are excited to serve this market— Bakkt (@Bakkt) September 23, 2019Bakkt entry to the Bitcoin market has not been a big-bang event as many might have expected! At press time, the Bakkt platform has traded 29 Bitcoin Futures contracts as per the official data with a total traded value over $290,000. According to Bakkt, the first trade execution took place at a BTC price of $10,115 after which Bitcoin slipped to $9938 levels, at press time.This soft launch of Bakkt has certainly not impressed the Bitcoin investors. However, experts from the crypto industry think that in the coming days, we can see higher institutional inrush. Experts say that we can’t estimate Bakk’ts futures contracts performance on the first day itself.This is because not all futures brokers are ready to clear the contracts on the first day. Moreover, it takes time for companies to set up their accounts, formulate their trading strategies and thus build volumes.Expert Opinions on Bakkt Bitcoin Futures LaunchLast week, popular crypto market analyst made some comparison of the Bakkt Bitcoin Futures launch with the CME Bitcoin Futures launch. In a Twitter poll, he asked his followers if Bakkt can manage to make the same impact as the CME.CME bitcoin futures traded $460 million on its first week. Current volume is around $700 million. The Van Eck fake ETF traded $0 on its first week.How much volume will Bakkt attract is a key variable for the week ahead. Would you expect Bakkt to flop or to launch successfully?— Alex Krüger (@krugermacro) September 22, 2019However, responding to it another crypto investor Ari Paul said that the nature of both these futures contracts is completely different. While CME’s Bitcoin Futures are cash-settled, Bakkt offers physical delivery for its contracts. Paul argues that physical contracts usually see a ‘gradual scale-up’, unlike the cash-settled ones.Probably a more gradual scale up since it’s physical. With CME futures, anyone with the right FCM could immediately trade on launch.— Ari Paul ⛓️ (@AriDavidPaul) September 22, 2019But I’d think the incremental demand (beyond CME) would come from people who want to buy or sell physical for delivery, at least at first. Receiving could be instant (use FCM to convert), but I kind of thinking depositing physical will be gradual.— Ari Paul ⛓️ (@AriDavidPaul) September 22, 2019Moreover, if we see the timing of the launch, the Bitcoin trading volumes during December 2017 were much higher in comparison to what they are today. According to data by Messari, the Bitcoin trading volumes today are only $367 million which shows the reason behind low volatility. On the other hand, the data by Blockchain.com shows trading volumes at $1.36 billion. Thus, only when we get a real idea of the Bitcoin price movement, we can get to know the true impact of Bakkt.Commenting on the matter further, Simon Peters, Analyst at eToro, said:“The Bakkt launch has already been priced into recent market movements, and we may see some early speculators who bought bitcoin in anticipation of the Bakkt release deciding to cash out their profits, following the popular ‘buy the rumour, sell the news’ maxim”.He further added:“For me, it’s price discovery which makes Bakkt an important and much welcome development for the community. As the platform won’t rely on unregulated spot markets for settlement prices, it will serve as a transparent price discovery mechanism to establish a better benchmark price for bitcoin going forward.”Bitcoin Trading on ICE’s Bakkt Futures Platform Breaks $290,000 Barrier
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