Leveraged Funds Cut Bitcoin Futures Shorts by 5,300 BTC-Equivalent While Open Interest Contracts

Shorts shrink as leveraged funds scale back Bitcoin futures bets

Leveraged funds reduced their reported Bitcoin futures short positions by about 5,300 BTC-equivalent in the week ending September 29, according to the latest data from the U.S. Commodity Futures Trading Commission. Their net short position narrowed from 40,110.83 to 35,720.13 BTC-equivalent. However, their long positions also declined, and total open interest across the covered markets fell 13.31%.

Short positions in futures markets are bets that a price will fall. Long positions are bets that it will rise. Open interest measures how many outstanding futures contracts exist in a market. A falling open interest means fewer total contracts are outstanding.

Key numbers from the week to September 29

• Reported shorts fell 5,299.69 BTC-equivalent.
• Longs fell 908.99 BTC-equivalent.
• Net short narrowed by 4,390.70 BTC-equivalent to 35,720.13.
• Combined open interest dropped 13.31% to 103,343.14 BTC-equivalent.
• Asset managers' net long position increased 2,137.90 BTC-equivalent to 18,069.10, driven mainly by fewer shorts rather than more longs.

What the CFTC report covers and what it does not

The CFTC data covers four products: CME Group's standard and micro Bitcoin futures, plus Coinbase Derivatives' nano Bitcoin futures and nano perpetual-style futures. Different contract sizes are converted into BTC-equivalent terms for comparison.

The report covers only futures positions. It does not include spot Bitcoin holdings, exchange-traded fund (ETF) positions, or individual transactions. A futures short can serve as a hedge against other positions, so a reduction in shorts does not necessarily mean a fund is becoming more bullish.

What the numbers don't prove

The improvement in net positioning happened at the same time as a contraction in overall futures activity. Both longs and shorts shrank; shorts simply shrank faster. This means the smaller net short does not establish fresh spot buying or reduced bearish conviction on its own.

Standard CME futures accounted for 4,310 BTC-equivalent of the short reduction, and leveraged-fund longs in that product actually rose 1,175 BTC-equivalent. However, longs fell in CME micro futures and both Coinbase products, more than offsetting that gain. The September expiry for CME micro futures fell on September 25, between the two weekly observations, but the data does not confirm that the contract expiry or rolling of positions caused the contraction.

The CFTC also groups traders by predominant business activity, and classification changes between reporting periods can affect category totals.

What comes next

The next CFTC Tuesday position report is scheduled for October 9. It will show whether the shift in leveraged fund positioning continues or reverses.

Sources

• CryptoSlate