Hedge Funds Go Bullish on Bitcoin Futures
January 26 2018 - 5:18PM
Dow Jones News
By Alexander Osipovich
Hedge funds have swung their bitcoin-futures bets to the bullish
side for the first time, a marked turn around from a few weeks ago,
according to figures released on Friday.
The data from the Commodity Futures Trading Commission suggests
a shift in sentiment among so-called "leveraged funds," a category
that includes hedge funds. Ever since late December, when the CFTC
began publishing weekly reports on the new bitcoin-futures market
run by Cboe Global Markets Inc., data had shown that these funds
were bearish on bitcoin, unlike smaller investors who are
overwhelmingly bullish.
Futures are a type of derivative that allow traders to bet on
whether the price of an asset will rise or fall. Long positions in
bitcoin futures profit if the price of the digital currency rises,
while short positions pay off if it falls.
The most recent CFTC report showed leveraged funds with 1,142
long positions in bitcoin futures, more than double the 518 short
positions they held.
That data was current as of Tuesday, Jan. 23, although it was
only released Friday. By comparison, as of Dec. 26, hedge funds'
short positions in Cboe bitcoin futures outnumbered their long
positions by more than 4 to 1, CFTC data show.
The shift in hedge-fund sentiment came as the price of bitcoin
slumped by 31% over that period, according to data from research
site CoinDesk. Bitcoin was trading at $10,898.99 late Friday
afternoon, according to CoinDesk, after having approached $20,000
mark in December, when heavy retail investor interest pushed the
digital currency to record highs.
Since then, a crackdown on digital-currency trading in South
Korea, one of the largest markets for bitcoin, helped fuel the
selloff.
Chicago-based Cboe was the first regulated U.S. exchange
operator to launch bitcoin futures in December, followed by its
larger crosstown rival, CME Group Inc.
Still, bitcoin futures remain a relatively small market compared
with bitcoin itself, making them an unreliable bellwether for
trends in the digital currency, traders say.
Write to Alexander Osipovich at
alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
January 26, 2018 18:03 ET (23:03 GMT)
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