Glassnode: Bitcoin Price Cannot Rise Due to These Positions Worth $6.3 Billion
Bitcoin could not gain upward momentum despite breaking a 19-day series record in spot ETFs in the USA.
According to the weekly report of Blockchain analysis firm Glassnode, this may be due to increasing short positions in Bitcoin markets.
Buying pressure is losing strength
Glassnode analysts said, “Although there is an impressive flow of money in ETFs in the USA, neutral Cahs-and-Carry transactions in the market weaken the buying pressure and more demand from outside arbitrage is required to trigger price movement.”
Investors who trade Cash-and-Carry, an arbitrage strategy, benefit from the price difference between an underlying asset and its derivative instruments.
According to Glassnode analysts, investors are turning to the spot Bitcoin market to take long positions. However, they simultaneously use Bitcoin futures contracts on the CME exchange to open short positions.
Hedge funds got involved
While investors were longing Bitcoin in the spot market, they were shorting Bitcoin in the futures market, weakening the buying pressure in the Bitcoin markets. This also cushioned the impact of 19 days of demand for spot Bitcoin ETFs in the US.
“We see that institutions categorized as hedge funds are taking increasingly larger short positions in Bitcoin,” the Glassnode report said.
“Hedge funds are currently net short in both the CME Bitcoin and Micro CME Bitcoin markets, totaling $6.33 billion and $97 million, respectively,” analysts said.