Bitcoin may continue its fall

Recently, another surge in the activity of large investors and multi-active traders has been recorded. Their return could mark the beginning of a bull cycle, as fans of the main cryptocurrency would like, but some circumstances show the opposite.

According to analysts, the majority of investors and traders who have returned to the asset believe that the main crypto asset will continue to decline and, for this reason, go into short trades, which imply a profit due to the fall of BTC. Such bitcoin futures are listed on the Chicago Mercantile Exchange, and this turn of events leads to a situation where futures prices are below the spot prices. A large gap between spot and futures prices creates an arbitrage opportunity. This concept implies the use of the created situation and making a decent profit in the difference between prices in different markets.

Vetle Lunde commented on the situation as follows:

Institutional activity flourished on the CME, but activity was largely focused on short positions. The November CME contract traded at a huge discount to spot last week.

At the moment, we can observe the biggest discount in the bitcoin market, which is even larger than the one that was traced in March 2020 with the advent of worldwide quarantine due to the coronavirus pandemic. Last week showed bitcoin futures listed on the Chicago Mercantile Exchange at a daily discount of 3.6%. At the same time, interest in BTC futures grew by 35%+ to the level of 93,000 BTC, and in combination with the increased discount on Bitcoin, this can easily be explained by the arrival of new money in short positions. Therefore, the analysts turned out to be right and in the near future the trend will continue with a bearish character.

Markus Thielen, head of research and strategy at the crypto platform Matrixport, confirms the speculation and the increased interest in short positions from institutionalists:

The futures discount signals serious negative sentiment among multi-asset investors, who tend to allocate a small trading allocation to CME-listed cryptocurrency futures.

The topic of the fall of the American crypto exchange FTX still does not let go of many participants in the cryptocurrency market. As a result of the FTX bankruptcy, many institutional investors have high concerns about cryptocurrencies. This will most likely prolong the downtrend for a while. Recall that before its fall, FTX was considered one of the most prestigious crypto exchanges and was one of the top 3 best cryptocurrency platforms.