CME futures traders widely bearish on Bitcoin as a big movement looms

CME futures traders widely bearish on Bitcoin as a big movement looms

Photo by Mika Brandt on Unsplash

Bitcoin’s ongoing consolidation phase has been perpetuated by limited liquidity and cratering trading volume.

This has caused the cryptocurrency to trade within the lower-region of its long-held trading range between $9,000 and $10,000.

BTC’s lackluster price action has directed greater attention to the benchmark cryptocurrency’s smaller counterparts. Traders are now moving to capitalize on the ongoing rallies seen by many smaller cryptocurrencies – also known as “altcoins.”

As investors await further Bitcoin volatility, futures traders on the CME are growing increasingly bearish.

Data shows that institutions, retail traders, and professional traders using the platform are all starting to load up on short positions.

Traders closely watch for Bitcoin to make a big movement

Throughout the past few weeks, Bitcoin has narrowed its trading range to between $9,000 and $9,300.

The cryptocurrency is now trading squarely between these two levels at its current price of $9,100.

A few factors are suggesting that this sideways trading won’t last for too much longer.

Bitcoin’s Bollinger Bands are currently the tightest that they have been since November of 2018. When these bands “squeeze” like they are now, it typically means that a massive movement is imminent.

In November of 2018, these squeezing bands closely preceded a sharp price decline that sent the crypto’s price reeling down by over 50 percent to lows in the $3,000 region.

BTC’s realized volatility is also at a historic low, which typically doesn’t last for too long. If history repeats, the crypto is about to see a spike in its volatility.

Futures market sees lowest volume in 3 months as traders grow bearish 

The prolonged sideways trading that Bitcoin has seen as of late is having tangible impacts on its underlying market.

While looking towards the futures market, the crypto just saw its lowest trading volumes in over three months.

Analytics platform Coinalyze spoke about this in a recent post:

“Bitcoin – another boring day… lowest volume on futures markets over the last 3 months.”

Bitcoin
Data Source: Coinalyze

Data also suggests that traders utilizing the CME’s Bitcoin futures product are widely growing bearish on the cryptocurrency.

While looking towards the Commitments of Traders Report (COT), although open interest on the platform has climbed slightly in July, the net-long positions of retail and professional traders have been diving.

The CME’s COT report can be seen below, as put forth by crypto data aggregator Unfolded:

Data Source: Unfolded

Institutions remain firmly net-short, but they are starting to add some slight long exposure.

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