Derivatives traders on the Chicago Mercantile Exchange (CME) missed a huge profit when the spot market price of Bitcoin topped $ 55,000 this week.
According to data from Cointelegraph, retail investors reduced their long positions in the Bitcoin futures and options markets in late September. share of ecoinometry. The number of short positions also increased, suggesting that derivatives traders were expecting Bitcoin prices to fall, as shown in the chart below.
Bitcoin Derivatives Market on CME – Retailers | Source: Ecoinometry
The data was taken on September 28th when Bitcoin price fell below $ 41,000, nearly 23% below its monthly high of $ 52,950. The bitcoin price drop comes after China made the decision to ban all types of crypto-related transactions. Nick, an analyst at Ecoinometrics, said:
“Most likely this decline was due to traders not moving their long positions to the October contract, and some were fully liquidated when it looked like Bitcoin was going to drop below $ 40,000 last week.”
“Whatever the cause, the big picture is that derivatives traders lack trust.”
“These are the people whose mentality is easily shaken.”
Institutional investors in the CME bitcoin futures market also followed retail sentiment as they reduced their long exposure to the market. On the other hand, however, their short positions are high.
Bitcoin Derivatives Market on CME – Smart Money | Source: Ecoinometry
Since the options trader CME thinks the price of Bitcoin will fall, the number of put options – bets on falling Bitcoin prices – is almost twice the number of call options – bets on rising Bitcoin prices. .
CME Bitcoin Options – OI Put vs Call | Source: Ecoinometry
The position allocation of the traders makes $ 40,000 the most desirable real price target.
On the flip side, some options traders are betting that the bitcoin spot price will hit $ 60,000 by the end of October, and analyst Crypto Hedger stressed that bitcoin options will target on the 26th.
Buy / sell volume in the last 24 hours for Bitcoin options on November 26th | Source: Crypto Hedger
“At the current growth rate, Bitcoin has formed very strong support at $ 50,000 and short-term traders may also have to look out for major resistance around $ 56,000,” said Konstantin Anissimov, CEO of CEX.IO.
“A break below or above these levels could trigger a reversal or a major race towards $ 60,000 in the fourth quarter.”
The Bitcoin supply is scarce
On-chain data shared by Ecoinometrics also shows an increase in Bitcoin withdrawals from exchanges.
In particular, the 30-day outflow of Bitcoin across exchanges has increased since July 2020, as shown in the graph below, with blue and red colors indicating outflows (outflow) and enormous inflows, respectively.
Bitcoin Net Flow on Exchanges | Source: Coinmetrics
Ecoinometrics notes that the number of bitcoins currently leaving the exchange is higher than in the previous four-year halving cycle.
Bitcoin inflows on exchanges (second halving vs. third halving) | Source: Coinmetrics
In the meantime, traders see a decline in Bitcoin balances on the exchanges, combined with increasing “hold” activity, as further catalysts for the liquidity crisis and drive the price up even further.
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According to Cointelegraph