The latest Commitments of Traders report shows that wealthy retail traders used CME futures to short bitcoin to the tune of $0.5 billion at the start of the latest Omicron-led pullback, and are reaping a handsome reward.
Futures Trading Commission Commitments of Traders reportCommercial traders, which are firms and/or professionals with deep industry and market knowledge generally hired to mitigate business risk through use of futures contracts, cut back sharply their long bitcoin futures holdings to pre-BITO levels but boosted sharply their ‘spread’ contracts – which is the practice of holding long and short positions in the same contract to provide liquidity to those who need it.
Meanwhile retail traders shrewdly adopted the previously discussed short bitcoin futures position, betting on the price of bitcoin possibly falling below the $57,600 level bitcoin seen last week – bitcoin did fall to a low of 53,200 on Nov 28 and that could have provided some of these retail traders a profitable exit of their short trades – which become profitable as the price of an asset decreases in value.
While bitcoin price has dropped 18% below its $69,000 Nov 10 high, this has been due to robust macro headwinds like rising inflation and the Omicron variant impact on the global economy, and not due to weak bitcoin demand. In fact, the sharp drop in crude oil prices - Brent crude oil price down 20%+ since Nov 10 – shows that Omicron uncertainty is providing an organic break to inflationary forces.
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