BTC Records Historical Long Positions

Institutional investors and informed market participants, commonly referred to as ‘smart money,’ are significantly increasing their investments in bitcoin (BTC) as the deadline for the U.S. Securities and Exchange Commission (SEC) to approve a spot BTC exchange-traded fund (ETF) approaches.

BTC Records Historical Long Positions

This insight comes from MacroMicro, a Taiwan-based data tracking website, specifically from its bitcoin futures smart money index. The index monitors the spread between large investors’ long and short positions on the Chicago Mercantile Exchange, relying on the CFTC’s weekly Commitment of Traders report.

The smart money index surged to 13,711 last week, surpassing the previous peak of 13,603, indicating a record level of bullish positioning by asset managers and other notable entities. The CME’s cash-settled standard bitcoin futures contracts, with a size of 5 BTC, are widely recognized as a gauge for institutional activity. These futures contracts provide a regulated means for market participants to gain exposure to cryptocurrency without direct ownership.

Futures, being derivative contracts, entail an obligation for the buyer to acquire an asset and the seller to sell an asset at a predetermined price in the future. Going long implies a commitment to buying the underlying asset and reflects a bullish sentiment, while going short suggests the opposite.

In Anticipation of Anticipated Bitcoin ETF, ‘Smart Money’ Records Historic Long Positions on BTC

The smart money index has experienced a significant uptick this quarter, fueled by the buzz surrounding spot ETFs and the growing anticipation of a Federal Reserve rate cut in 2024. The U.S. SEC has purportedly marked January 10 as the deadline for approving or rejecting a bitcoin-centric exchange-traded fund (ETF), distinct from futures linked to BTC. Analysts anticipate substantial capital inflows into the asset class if one or more spot ETFs are launched.

These optimistic expectations have propelled bitcoin to nearly a 60% increase in value this quarter, setting the stage for a potential ‘sell the news’ market dynamic following the ETF launch.