With a potentially volatile week ahead, especially Tuesday (PPI data) and Wednesday (CPI, inflation and retail sales data), Large Speculators gave up their attempt at increasing their net-long positions in Bitcoin futures and actually became net-short, after Bitcoin went down ~15% from all-time highs set in mid-March. This data was published on Friday by the CFTC and captures data as of the previous Tuesday. Bitcoin is currently trading at the same price level as of last Tuesday. Positioning may drastically change by end of day tomorrow after PPI data comes out and not knowing how Speculators (both Large and Small) will behave prior to CPI on Wednesday which has been a very popular topic as of late and the level of risk they are willing to take. We will find out on Friday at 3:35pm Eastern when we publish our CMR COT charts.
Here is a closer look at positioning alone. With the uptick in Open Interest, it appears Large Speculators opened new net-short positions instead of closing out their long positions. Small Speculators continue to trade with Commercials, and so far, fading Large Speculators has done well in 2024. Notice in the above chart that the top in mid-March was put in as Large Speculators started to cover their short positions after being short the entire rally starting in November 2023. Since the top, Bitcoin has been trading sideways as positioning has not been crowded and closer to neutral.
Similar price action and positioning can be seen in Ethereum as well:
At this time, Bitcoin and Ethereum are not max crowded so from a CMR strategy, they would not be markets of tradable interest since there is no positioning edge, but that does not mean readers cannot take advantage of this data and observe Speculator behavior to learn more about the trend, potential to continue the trend and which market (Bitcoin or Ethereum) may offer a better reward/risk trade depending on the how crowded traders are in each market.
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Jason Shapiro & The CMR Team
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Thanks. Also, worthwhile information might be that miners, i.e., "commercials," are extremely underpaid for the fourth week in a row (since the BTC halving) and have stayed NET short for five weeks in a row. However, last week, "commercials" went slightly NET long but are still neutral. With options interest included, positions look similar but a tad more extended. Perpetual futures exchange BitMEX is showing negative OI-weighted funding rates (a bunch of shorts) but are nearing the zero line. They are "often" right in aggregate but also flip in a second. This market is heavily dependent on FOMO liquidity and lately that would be US ETFs thus Coinbase premium (proxy for US ETF buying) might show us the direction post CPI report later today.