Bitcoin Futures Weekly Report
CME Futures Analysis November 5
On Friday, November 8, Bitcoin fell from $9,250 to $8,700. Thus, sellers were able to take a healthy level of support and gain a foothold under it. A little later, buyers tried to return to their former positions, but they did not succeed, so their actions can be called a false breakdown.
We tracked the positions of the players in the CME futures market before these movements.
Open interest has grown significantly over the week: from 3,155 to 3,520 contracts.
Dealer-Intermediary (Major Broker)
This week, major brokers did not take any action practically. They closed only one long-position. But at the same time, for the third consecutive week, we have noted a decrease in the long-positions of this participant, albeit small.
Long Positions: 32 Change: -1
Short positions: 0 Change: 0
Asset manager / Institutional (Asset Manager / Institutional)
Quite significant changes have occurred in these market participants. Last week, we observed almost three times the superiority of short positions over longs. However, now we see that the number of long and short positions is almost equal. It suggests that the institutionalists ceased to believe in the subsequent growth of bitcoin, and decided to make money on the fall.
Long Positions: 188 Change: -72
Short positions: 149 Change: +63
Leveraged Funds / (Professional Funds)
The open interest among these players increased sharply by 20%, as a result of which the number of contracts on November 5 was 3,566. At the same time, the number of shorts and longs increased to approximately equal one. But this should not mislead us, because the general ratio of longs to shorts is 1 to 2. It means that the most active and the most significant player on CME on bitcoin futures is predisposed to short with a 67% probability. As it turned out later, this decision was justified.
Long Position: 1221 Change: +265
Short positions: 2345 Change: +329
Other Reportable / (Player with lower capitals, medium in importance)
Open interest in this group has not changed, because the number of new contracts was only +38 as compared to the week ago. The activity of these players decreased, and they took a more wait-and-see attitude. It follows from the fact that last week, the vast majority of players closed short positions and scored a large number of longs (+248). The ratio of the contracts of this player is approximately 60/40 in favor of longists.
Long Position: 595 Change: +26
Short positions: 457 Change: +12
Nonreporatable Positions / (Small Traders, Crowd)
The new contract number for the week increased by about 5%, which is also a small indicator for this group of players. The nature of the changes clearly shows a belief in the further growth of bitcoin, as short positions were actively closing, and long positions were gaining. It also proves that the total number of all long contracts is more than three times greater than the number of short contracts.
Long Position: 1297 Change: +112
Short positions: 382 Change: -74
As we can see, on November 5, a picture emerged in which large and professional players continued to believe in the fall of bitcoin as the most likely course of events. But small traders and the “crowd” to a greater extent considered growth more likely. As a result, it turned out the professionals were right, as they were able to predict the fall of bitcoin that happened on November 8. Once again, we saw confirmation of the saying, “listen to the crowd and do the opposite.”
Bakkt Volume Analysis
As we can see, the activity of Bakkt is continuously increasing since the sharp drop in bitcoin on October 23. Also, during the fall on November 8, a new record was set, which amounted to $15.5 million. In addition to the volume, the number of contracts increased sharply, which also set a record and amounted to 1756 contracts per day.
There was no news from the Bakkt team and its heading ICE this week. We only recall that in early December, in addition to futures, Bakkt promised to launch bitcoin options.
Technical Analysis of CME Elimination Levels
Bitcoin, which recently traded in the side corridor of $9,000 - $9,600, broke through the support level in the area of $ 9,000 and rushed down, reaching the previously calculated 25% margin level for futures on the CME exchange.
After that, we saw a rebound and a retest of the previously broken support level, which now acted as a resistance level of $9,050. Now we are seeing that buyers have failed to return to the previously traded corridor, and the bitcoin price has again rushed down.
Below we have two new margin levels for CME futures with some liquidation zones, which we are more likely to follow this week. The first immediate target is in the area of $8,500 (50% margin level), which coincides with the attract Fibonacci retracement level of 0.618. Still, if the market starts to panic, then there is every chance that this level will fly up to 100% of the margin level in the region of $8,200.