The Neironix analytics department considered the situation for CME and Bakkt Futures in detail, and suggested possible consequences.
CME Futures Analysis October 29
Recall that earlier, on October 25-26, a strong growth of bitcoin was recorded from $ 7,400 to $ 10,300 literally per day. As a result, a gap formed on the CME on bitcoin (GAP). After that, bitcoin switched to flat, and therefore it is important to find out how large and small players on the SME exchange relate to such strong previous events.
Open interest on October 29 amounted to 3155 contracts.
Dealer-Intermediary (Major Broker)
The player closed almost half of the long positions from 59 to 33 contracts (-26). At the same time, they did not open short positions, and there is nothing to evaluate so far.
Asset manager / Institutional (Asset Manager / Institutional)
The players have demonstrated activity. The number of long positions increased from 163 to 260 (+97), and this is more than 50%. A significant increase also occurred with short positions from 33 to 86 (+55). It can be seen from these data that the players have activated, and most of them are set up, as the ratio of the number of longs / shorts is 3 to 1.
Leveraged Funds / (Professional Funds)
The most significant and professional players at the moment. In their case, the situation is radically different. The number of long positions increased by only 6 contracts, while the number of short positions increased immediately by 302 contracts. Such a definite advantage indicates a clear expectation of a subsequent fall. The fact that the number of short positions is more than 2 times greater than long positions serves as confirmation of these players intentions.
Other Reportable / (Player with lower capitals, medium in importance)
In this group of players, we observe a significant increase in the number of long positions, almost 2 times - from 321 to 569 contracts (+248). At the same time, we see a decrease in short positions. This situation suggests that this player believed in the growth of bitcoin judging by the collected longs and folding short-positions.
Nonreporatable Positions / (Small Traders, Crowd)
Here the situation is different. Small players, or the crowd, closed both long and short positions. But at the same time, the number of current long-positions is still significantly higher than in short positions.
Based on this analysis, it follows that most market players believed in further growth after October 25. But given the behavior of funds in the market, we can say that this is at least unsafe. At the moment, they occupy about half of the entire market, so their behavior plays a significant role at the moment. A massive number of short positions, which continues to be intensively collected, speaks of a possible decline as a more likely event.
Bakkt Volume Analysis
Bakkt trading volume increased ten times before the growth of Bitcoin on October 25. As a result, it reached the mark of $5 million per day. And immediately on the day of Bitcoin growth, the trading volume on Bakkt set a new record, showing a value of $ 10 million. Yesterday, November 5, the volume of the contracts was close to a new record, but this did not happen.
As you can see, the trading volume on this exchange begins to increase. There was no immediate effect, but now little by little, investors are beginning to trust this platform, which is reflected in a significant increase in trading volumes.
Also, recall that last week, Bakkt announced the launch of options on Bitcoin. This event should happen in early December under the assurances of the ICE exchange.
Besides, last week, it became known that Bakkt, together with the famous Starbucks coffee house, is going to launch an application with which it will be possible to buy coffee for bitcoins. A little later, it became known that the company plans to launch this application in June 2020.
Technical Analysis of CME Elimination Levels
After a strong impulse for bitcoin in the area of $ 10,000, the market took a break and had been consolidating for ten days, gaining resources for the next impulse. Having calculated the margin levels of CME, we have the following immediate goals for buyers: $ 9,700 (25%), $ 9,900 (50%), $ 10,300 (100%), areas of accumulation of margin requirements for intraday sellers.
The buyer's liquidation zones are: $ 8,700 (25%), $ 8,550 (50%), $ 8,200 (100%), zones of accumulation of margin requirements for intraday buyers. 50% of the area coincides with the local support level and 0.618 Fibonacci level, which makes this area as attractive as possible for sellers in the event of a fall, where we will see a price slowdown or a rebound.