Hedge funds cut bearish Bitcoin futures bets as price slid toward $80,000

Hedge funds trim Bitcoin short bets by nearly 15%

Hedge funds reduced their net bearish Bitcoin futures positions by nearly 15%, cutting short exposure by 5,292 BTC, while Bitcoin's price fell toward $80,000.

Data from the Commodity Futures Trading Commission (CFTC), the U.S. agency that regulates futures markets, showed leveraged funds held a net short position equal to 30,611 BTC as of Oct. 13. A week earlier, that figure was 35,903 BTC.

A net short position means traders hold more bets that the price will fall than bets that it will rise. The reduction came as Bitcoin slipped about 3% during the reporting period, from roughly $85,600 on Oct. 6 to $83,100 on Oct. 13, according to the source material.

Key numbers from the CFTC report

• Net short position fell to 30,611 BTC from 35,903 BTC, a drop of 5,292 BTC.


• Outright short positions declined by 6,437 BTC to 59,458 BTC.


• Outright long positions fell by a smaller 1,145 BTC to 28,847 BTC.


• Leveraged funds still held more than twice as much outright short exposure as long exposure.


• Spreading positions rose by 2,719 BTC-equivalent per leg to about 8,434 BTC, up nearly 48%.


• Combined open interest across standard and micro Bitcoin futures fell about 3,567 BTC-equivalent, or 3.2%.


• Bitcoin ETFs recorded nearly $230 million in weekly outflows.

Why the shorts were reduced

The price decline gave bearish traders chances to take profits, and repeated price reversals made holding leveraged positions riskier. Leveraged funds therefore had an economic incentive to reduce exposure even while Bitcoin stayed under pressure.

Bitcoin's weakness accelerated on Oct. 7 as Treasury yields approached 5.3%, and expectations of more Federal Reserve tightening weighed on speculative assets, the source says. Higher bond yields made interest-bearing investments look relatively more attractive.

Traders shift toward spread positions

While cutting outright bearish bets, leveraged funds increased positions that pair offsetting long and short Bitcoin futures contracts. CFTC data showed spreading positions rose nearly 48% that week.

Such strategies can involve buying futures contracts expiring in one month while selling contracts expiring in another. This lets traders try to profit from differences in futures pricing while limiting exposure to the direction of the price.

Gross long exposure rose by 1,574 BTC to about 37,281 BTC, even though outright bullish positions declined. Gross short exposure fell by 3,718 BTC to 67,891 BTC, as increased spreading activity partially offset the cut in directional shorts.

Asset managers showed a different pattern. They held about 18,440 BTC-equivalent in net long positions, a bullish imbalance that rose by roughly 547 BTC, mainly because short holdings fell faster than long positions.

Market pressure after the report

On Oct. 14, hotter-than-expected U.S. consumer inflation revived expectations of another Federal Reserve rate increase and sent Bitcoin below $83,000.

The next day, a sharp rise in wholesale inflation pushed the cryptocurrency to about $79,730 and triggered $939 million in cryptocurrency liquidations, according to the source. Liquidations happen when leveraged trades are forcibly closed.

Bitcoin later recovered to about $82,800 on Oct. 19, though the market remained vulnerable to further selling. CryptoSlate reported that Glassnode identified a significant concentration of buying interest near $80,000, with the next major support around $78,000 if that level fails.

Earlier in the month, a selloff in South Korean semiconductor stocks spread through Asian equities. South Korea's KOSPI fell about 5.5%, with Samsung Electronics and SK Hynix taking heavy losses amid concerns about the financing and profitability of artificial intelligence investments. That coincided with roughly $813 million in crypto liquidations over 24 hours, including $686.72 million in bullish positions. Bitcoin briefly fell below $81,000 before rebounding above $83,000.

What is confirmed

The CFTC figures for positions as of Oct. 13 show leveraged funds cut net short Bitcoin futures exposure and increased spreading positions. The accompanying price moves, ETF outflows, and liquidation totals are reported as stated in the source material.

What is still unclear

The market moves after Oct. 13 happened after the latest CFTC positioning snapshot. It is not known whether leveraged funds continued reducing bearish exposure or rebuilt short positions during the renewed selloff.

What happens next

The next CFTC report is scheduled for Oct. 23 and will cover positions as of Oct. 20. It is expected to give the first indication of how hedge funds responded to Bitcoin's latest inflation-driven decline and whether the earlier reduction in bearish bets continued.

Sources

• CryptoSlate

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