Wall Street is heavily betting against bitcoin through the CME futures exchange according to shorts and longs data by CFTC.
13,601 contracts are short and 13,170 are long, the data shows. Making it a net short of 430 contracts, one of the highest ever.
“All data suggests that CME traders are shorting BTC heavily,” says Vetle Lunde, a Senior Analyst at Arcane Research.
One clear indication that Wall Street is shorting bitcoin at a record rate is CME’s futures discount to the spot price.
That discount currently is higher than even March 2020, making it the biggest discount ever seen between CME futures and bitcoin’s spot price.
That’s on high volumes with 48,554 contracts, equivalent to 242,770 BTC, changing hands on November the 8th, the day BINANCE announced ‘intention’ to acquire FTX following a “liquidity crunch.”
The FTX events have clearly dented sentiment, but record shorts can attract countertraders as they may indicate the sentiment has overshot in one direction.
The FTX saga in addition appears to have largely been contained so far, with no noticeable domino effects across the industry unlike the fall of Luna which brought down numerous centralized crypto lenders as well as a hedge fund.
In the case of FTX, it seems they’ve only brought themselves down and BlockFi, which was on life-support due to the Luna collapse, with Genesis Capital now also pausing withdrawals.
In many ways, one can even see FTX as part of that Luna collapse, though delayed because they had customer’s deposits in the exchange to ‘tap’ into.
For how long Wall Street will keep record shorting, therefore, is unclear but once these shorts are closed that effectively amounts to buying bitcoin contracts, which may add upwards pressure on bitcoin’s price.
