Leveraged funds trimmed their net bearish Bitcoin futures positions by nearly 15% in the week to Oct. 13, even as the price fell toward $80,000. Inflation data after the reporting period pushed Bitcoin lower still, leaving open whether the funds kept cutting shorts.
Hedge funds cut their net bearish Bitcoin futures bets nearly 15% even as the cryptocurrency tumbled toward $80,000. Data from the Commodity Futures Trading Commission (CFTC) showed leveraged funds held a net short position equivalent to 30,611 BTC as of Oct. 13, down from 35,903 BTC a week earlier.
The 5,292 BTC reduction came as Bitcoin fell nearly 3% during the reporting period, from about $85,600 on Oct. 6 to $83,100 on Oct. 13. The decline gave bearish traders opportunities to take profits, while repeated price reversals increased the risk of holding leveraged positions.
Shorts shrink faster than longs
Outright short positions declined by 6,437 BTC to 59,458 BTC, compared with a smaller reduction of 1,145 BTC in outright longs to 28,847 BTC. However, leveraged funds still maintained more than twice as much outright short exposure as long exposure.
Meanwhile, the funds raised positions that pair long and short futures contracts. Spreading positions rose by 2,719 BTC-equivalent per leg to about 8,434 BTC, up nearly 48% during the week. Combined open interest across standard and micro CME Bitcoin contracts declined by approximately 3,567 BTC-equivalent, or 3.2%.
Pressure from yields and Asian equities
Bitcoin's weakness accelerated on Oct. 7 as Treasury yields approached 5.3% and expectations of additional Federal Reserve tightening weighed on speculative assets. On Oct. 13, a sharp selloff in South Korean semiconductor stocks spread through Asian equities, and the market saw approximately $813 million in cryptocurrency liquidations over 24 hours.
Inflation data reopens the question
The CFTC snapshot predates the latest moves. On Oct. 14, hotter-than-expected US consumer inflation revived expectations of another Federal Reserve rate increase, sending Bitcoin below $83,000. The following day, a sharp increase in wholesale inflation pushed the cryptocurrency to approximately $79,730 and triggered $939 million in cryptocurrency liquidations.
The next CFTC report, scheduled for Oct. 23 and covering positions as of Oct. 20, will offer the first indication of how hedge funds responded.
Source: CryptoSlate
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