The futures traders biases are flipping long on Bitcoin [BTC] with conviction at the moment. The funding rate and BTC basis across major crypto exchanges is positive. Arthur Hayes, the CEO of BitMEX derivatives exchanges tweeted on the state of contango in the futures markets as September contracts trades above $10,000. He tweeted,
A gunslinger never sits with his back to the entrance. Watch the backend, XBTU20, rocket as we tear through 10k. pic.twitter.com/amCwsz6FCU
— Arthur Hayes (@CryptoHayes) May 18, 2020
The percentage basis (the diff. between Futures and Spot prices) across all derivatives exchange is positive at the moment, except for Binance. The spot high in price at Bitstamp is $9,966, as the futures and perpetual swaps are trading at a premium. The funding rate on BitMEX has crept up to 0.915% on the daily, while it is tremendously high for XRP and Ethereum contracts, at 0.248% and 0.622%, respectively.
Greater long side equity has acted as a deterrent for the whales to cause a flip in the opposite direction. Light (alias), a crypto analyst and trader suggested that the rise is having the characteristics of a bullish tell. He noted on Hayes’ tweet,
Would consider this a tell on how smart speculative money is positioning. Longs on futures are playing a break over $10K and swap funding moving to a positive structure while futures Contango expands.
CME Gap Analysis
The futures contract price on CME are in contango as well as the Open Interest continues to remain high at $483 million.
However, the weekly opened with a positive gap of $270 which brings bearish tidings on correction to $9520-$9570. The price attempts to break above $10,000 for the third time this month.
A clean break above yearly highs around $10,670 of BTC futures on CME should open up the possibilities to 2019 highs around $14,000. While the uncertainty in the economy favors the rise of Bitcoin and Gold, overwhelming longs orders can give rise to massive volatility in prices.
Do you think that bullish tidings are underway or a failure to break above $10,000 calls for bears? Please share your views with us.