bitcoin futures
Bitcoin,  United States

Institutional investors are now more bullish on bitcoin—at least when it comes to futures

It’s not a lot but, hey, it’s something

Large financial institutions may not be as negative on bitcoin as they were before while smaller investors might not be so bullish, according to the latest data from the Commodity Futures Trading Commission.

The CFTC’s most recent Commitment of Traders (COT) report shows that asset managers and institutional investors—pension funds, insurance companies, and the like—have switched from being completely short bitcoin to long the cryptocurrency, at least when ti comes to the futures contract on the Chicago Board Options Exchange (CBOE).

A “long” position means the investor owns the contract and is expecting prices to rise while a “short” means the contract was sold in anticipation of prices falling.

The COT report, released every Friday afternoon, shows how participants are positioned in the commodities market based on what type of trader they are. As of now, the only bitcoin futures contract they monitor is the one trading on the CBOE. Each of those contracts represents one bitcoin and the contract settles for the cash equivalent rather than requires delivery of an actual bitcoin.

According to the COT report, “Asset manager/institutional” traders required to report to the regulator are now long a total of 220 contracts, worth a little above $1.7 million as of Monday. They are not short any contracts. Just two weeks before, they were short 110 contracts but long no contracts.

On the flipside, traders who aren’t required to report—those with too few transactions or are too small—pared their long positions. They are currently long 2,323 bitcoin contracts and short 953 contracts (for a net of 1,370 contracts). Two weeks ago, they were 2,531 contracts while short 815 (for a net of 1,716).

However, it may be too early to read a lot into the COT report. The CBOE contract just began trading in December and there’s not that much interest away from the nearest contract date.

“The daily volume has mostly been concentrated in the near-month future and the open interest doesn’t change much from day to day,” said Gary Compton, a spokesperson for the CBOE, to Modern Consensus. “This could indicate that short term or day traders are concentrating on this contract. The farthest-dated contracts haven’t been trading too much, but the volume that is there seems to turn into open interest which could mean we do have some hedgers or longer term speculators in the market as well.”

The CBOE’s competitor, the Chicago Mercantile Exchange (CME), doesn’t even appear in COT report for its bitcoin contract because too few participants trade in it.

Nonetheless, the COT report allows at least a couple of blind men to describe an elephant.

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Lawrence Lewitinn, CFA was the founding editor in chief of Modern Consensus. Disclosure: Lewitinn owns no cryptocurrencies in his portfolio.