Short Sentiment Accelerates as Micro Bitcoin Contracts See Extreme Position Reductions | CFTC COT Weekly Cryptocurrency Position Report

On June 5, the CFTC released its latest CME Bitcoin Futures Weekly Report (May 26-June 1), which showed a slight retreat in Bitcoin prices during the statistical cycle.

Short Sentiment Accelerates as Micro Bitcoin Contracts See Extreme Position Reductions | CFTC COT Weekly Cryptocurrency Position Report

CME Bitcoin Futures

On June 5, the CFTC released its latest weekly report on CME bitcoin futures (May 26-June 1), which showed a slight drop in bitcoin prices during the statistical cycle, although the “effective decline” was relatively limited throughout the cycle and the market did not experience the same dramatic volatility as the previous two statistical cycles. After the sharp dive of the past half month, the market has entered a relatively stable “repair” phase, and this phase tends to allow all types of accounts to express a clearer inclination towards the market, so although the market backdrop for this weekly report is relatively uneventful, the results of the various account choices are actually more interesting.

The number of total positions (total open positions) plummeted from 9,376 to 7,318 in the latest issue, a new 57-week low, the last time a similar situation occurred a full year ago, in other words, market participation has dropped to a level close to the “freezing point” before the recent bull market started, which is obviously the result of further fermentation of market sentiment after the recent crash.

In terms of disaggregated data, the largest dealer long position fell further from 381 to 228, a new 26-week low, while the short position rose from 132 to 145, a new 7-week high, and the long-short (hedged) position rose further from 65 to 80, with large institutions taking another clear net position in the latest statistical cycle. In the latest statistical cycle, large institutions have once again made clear net air conditioning positions, and the long positions have come to a low level in the past six months after the end of the latest statistical cycle. Against the background that the market has stabilized to a certain extent, large institutions have continuously taken net air conditioning positions, and the strength of the positions is still increasing, which shows that large institutions have a clear short attitude towards the market.

The long positions held by capital management institutions fell from 465 to 407, while the short positions fell further from 651 to 619, and the two-way positions fell from 60 to 31. Although there was no net air conditioning position, the reduction in positions in the latest statistical cycle compared to the net long position in the previous statistical cycle shows that the expectation of the management institutions for the further rise of the market is not very strong, and with the resumption of the downward trend, the judgment of such accounts for the future market has shown signs of wavering, which also means that the performance of such accounts in the short term is referenced to the performance of the long position. This also means that the reference value of such accounts’ short-term position adjustment performance has decreased.

Leveraged fund accounts fell further from 2,231 long positions to 2,081 and short positions from 5,770 to 4,949 in the latest statistical cycle, with positions in both directions falling from 821 to 369. Leveraged funds made another significant position reduction in the latest statistical cycle. Such accounts continued to make risk-controlled reductions in a market selloff environment and did not make clear unilateral judgments, although this continuation of position reduction can be interpreted as a “euphemism” for a short bias.

In terms of large positions, long positions fell from 2565 to 2144, short positions fell from 384 to 269, and two-way positions plunged from 557 to 78, quickly breaking away from the nearly 23-week high to hit a new low of nearly 7 weeks. Large accounts did not continue the momentum of the previous statistical cycles to increase positions, but carried out a simultaneous reduction of multiple positions, the previous significant increase in the market near stagnation did not continue to attract thought, the optimism of such accounts for the market from the results of position adjustment has been transformed, whether “wind control position reduction” or “profit reduction”, large accounts now seem to have expressed for the short-term market The short-side attitude.

In terms of retail positions, long positions fell from 2231 to 1900, while short positions fell from 937 to 778. Considering that such accounts have been quite accurate in stepping on the rhythm of the market in the previous statistical cycles, this round of position reduction in the latest statistical cycle can be regarded as a new “anti-short warning” signal, as retail investors are not optimistic about further rallies and their attitude towards the future market has returned to a bearish condition.

CME Micro Bitcoin Futures
The number of total positions (total open positions) fell significantly from 37,049 to 13,050 in the latest data, and this type of contract, which has not been online for a long time, suffered a huge reduction of more than “waist cut” in the latest statistical cycle. Although there is a factor of position reduction due to the change of positions in the latest statistical cycle, such a significant reduction still requires the subjective willingness of various accounts to cooperate, and the market’s short-term risk control expectations are quite clear.

In terms of sub-data, the long position of the largest dealer position remained unchanged at 0, while the short position plummeted from 8746 to 28, and the long-short bi-directional (hedged) position remained unchanged at 0. Dealer accounts have essentially liquidated their micro bitcoin futures positions, and in terms of the number of bitcoins in the contract, the reduction in the short position in micro bitcoin by such accounts even outweighs the increase in the short position in the bitcoin contract, which is a subtle change. However, given the extreme nature of the position reduction action on micro bitcoin, more time needs to be set aside for observation on how to interpret the recommendations.

Managed positions rose from 160 to 210 long positions, while short positions remained unchanged at 0, and positions in both directions also remained unchanged at 0. Managed institutions continue to add modestly to their positions, as this type of account continues to test the waters for micro bitcoin, so do not read too much into such position adjustments.

Leveraged fund accounts saw their long positions plunge from 28,633 to 3,375 and their short positions plunge from 22,466 to 6,993 in the latest statistical cycle, with positions in both directions jumping from 530 to 20,401. Leveraged funds have made significant reductions in their positions in the latest statistical cycle, but it should be noted that the nearly fourfold increase in hedged positions shows that such accounts are not simply “pulling out” of such contracts, and it could be argued that such extreme reductions release a strong preference for risk control, and could also be considered an expression of a short-side attitude.

In terms of large positions, long positions rose from 2054 to 2273, short positions rose from 2309 to 2818, and two-way positions came back from 281 to 208. Large accounts in the latest statistical cycle once again in the long and short two-way simultaneous increase in holdings, but considering the short position of the increase is more obvious, so the continued increase in positions of such accounts, although expressing a more positive participation in the mood, but the long and short preferences for the market is not simply bearish, the current view of the net short position advantage is gradually established, the short term bearish attitude has been expressed.

In terms of retail positions, long positions rose from 4391 to 4934 and short positions plummeted from 2717 to 962. Retail investors have made a clear net long move in the latest statistical cycle, and the reduction in short positions is quite significant. Unlike the standard contract where retail investors have already started to take risk-off positions, the micro bitcoin contract, which has a much lower barrier to entry, has a much more pronounced willingness to “bottom”. It is worth noting that as the micro bitcoin contract market develops, the retail sentiment in these accounts may be more reflective of the “true retail” attitude of the market, and this will be the focus of attention for these contracts for some time to come.

CME Ether Futures
The market performance of Ether during the latest statistical cycle is similar to that of Bitcoin, but the effective price fluctuation of Ether during the statistical cycle is relatively smaller, so the market’s influence on the direction of position adjustments is relatively weaker, and the position adjustments of various accounts in Ether contracts are relatively closer to subjective judgments.

The number of total positions (total open positions) fell from 3665 to 2819 in the latest issue of data, ending the continuous upward momentum of the past three weeks, and the negative impact of the market decline in the past half month on market sentiment has gradually started to ferment.

In terms of the breakdown, the largest dealer position fell from 6 long positions to 0, short positions remained unchanged at 0 and long-short (hedged) positions fell from 38 to 0. Brokerage accounts liquidated all previously held positions in the latest statistical cycle, but given the limited positions previously held, there is not much value in reading too much into such transfers.

The long positions held by custodians remained unchanged at 0, the short positions rose slightly from 62 to 64 and the two-way positions remained unchanged at 0. Managed institutions made a very limited increase in short positions in the latest statistical cycle, and this magnitude of position transfer also lacks value for interpretation.

Leveraged fund accounts saw their long positions fall from 1580 to 1177 and short positions fall from 2626 to 2310 in the latest cycle, with positions in both directions falling from 109 to 12. This reduction can also be seen as a lagged reaction to the market crash, or an indication of a relatively bearish attitude towards the future market.

In terms of large positions, long positions fell from 726 to 416, short positions fell from 293 to 34, and two-way positions fell from 70 to 33. These accounts are not optimistic about the market stabilization and are also short in their thinking.

In terms of retail positions, long positions rose further from 1136 to 1181, while short positions fell from 467 to 366. Retail accounts took net long positions in the latest statistical period and are the only category of accounts expressing a clear one-sided bias in this statistical period. Considering that retail accounts had a clear long position in the previous cycle, the bottoming attitude of these accounts is becoming more and more clear in this period, and it is worth waiting for the continuation of the “magic” of retail accounts in Ether in the past period.

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