Institutional Traders are Shorting Bitcoin Now More Than Ever Before

  • Institutional traders are growing incredibly bearish on Bitcoin, widely betting that its price is poised to see a strong near-term pullback
  • This sentiment is a far depart from that seen by retail traders, which are more bullish than ever on the cryptocurrency
  • This data comes from the latest Commitment of Traders Report, which details an interesting trend in the dynamic between retail investors and so-called “smart money”
  • From a technical and fundamental standpoint, there are a few signs that may point to imminent weakness for BTC

Bitcoin and the entire cryptocurrency market have been lacking clear directionality for the past couple of weeks.

Despite forming a strong uptrend over the past month, the momentum seen by BTC, ETH, and other major altcoins is stalling. This has made it increasingly unclear as to just how strong the present uptrend is.

Analysts are noting that all eyes are closely watching to see how the US Dollar trends in the near-term, as this may be the primary factor that determines where BTC trends next.

Institutional investors on the CME seem to believe that strength in the US Dollar will create a headwind for Bitcoin, as they are now shorter on BTC than ever before.

Bitcoin Consolidates as All Eyes Turn Towards the US Dollar

Bitcoin and the US Dollar have formed a crystal clear inverse correlation to one another in recent weeks.

This has done little to offer clarity into Bitcoin’s near-term trend, resulting in it trading between $11,400 and $12,000 as its bulls struggle to maintain their momentum.

The tight correlation to the dollar comes as Bitcoin also sits at the top of a multi-year macro trading range.

One analyst believes that BTC is positioned to see a strong pullback in the near-term due to a confluence of these factors.

“BTC: Looking for price to pull back into the 0.75 range level during the week ahead. Weekly Stoch RSI at overbought levels and starting to show signs of crossing down. Dollar will be key imo,” he explained.


Image Courtesy of TraderXO. Chart via TradingView.

Institutions on the CME are Overwhelmingly Short on BTC

According to the latest Commitments of Traders Report, retail investors are the longest they have ever been on Bitcoin. In contrast, institutions trading on the platform are currently going short on BTC like never seen before.

Data aggregator Unfolded spoke about this in a recent tweet, saying:

“18 – August CME BTC Commitments of Traders Report (COT). Open Interest: 14,454 (up 10.4%). Smart money net short new all-time-high. Retail net long new all-time-high.”

Image Courtesy of Unfolded. Chart via TradingView.

How Bitcoin and the US Dollar trend in the coming week may determine whether or not the crypto market will reverse its uptrend in the near-term.

Featured image from Unsplash.
Charts from TradingView.