The latest data of Bitcoin futures by the US Commodity Futures Trading Commission (CFTC) on Friday reveals that speculative trading activities on Bitcoin futures have experienced a decline in comparison to the previous weeks.
Bitcoin Futures Experienced Weaker Speculative Trading
Many states that the result in a drop of speculative trading activities of the Bitcoin futures is the reflection of dropping the price of the cryptocurrency. It’s to remind that Bitcoin and other leading cryptocurrencies saw a negative week. Nevertheless, it’s quietly hovering the green mark on July 27, 2019.
At the time of writing, the crowning cryptocurrency Bitcoin is trading with a quick spike of 1.42 percent but still under $10k figure. Other altcoins are also showing a brief surge in their 24 hours trading volume.
The week ending on July 23 quickly highlights that market speculators (or non-commercial investors) reduced their long and short positions. It states that they held a net short position of 1222 Bitcoin futures contracts. In comparison, Hedgers (Commercial traders) also held a net short position of 26 contracts.
To make it even more clear, speculator attempts to find their profit ratio for the asset’s price volatility and hedgers try to reduce or “hedge” the risk created citing price fluctuations during the holding period of the digital assets.
Beside the volatile crypto market, a prominent economist and traders connect this drop with Bitmex’s bitcoin volume. Economist Alex Kruger on July 23, notes that according to exchange data, Bitmex bitcoin volume saw a 42 percent drop since last week’s CFTC news.
Bitmex bitcoin volumes have dropped 42% since last week's CFTC news (as measured by volume's 4 day moving average).
— Alex Krüger (@krugermacro) July 23, 2019
In addition to CFTC, CME (Chicago Mercantile Exchange) is the second institutions available for US individuals and investors to involve in bitcoin futures contracts activity. Bitcoin futures traded at CME are derivative financial contracts that allow dealing parting to transact an underlying asset at a predetermined date in the future and for a certain price. CME offers cash-settled futures trading wherein users aren’t dealing with the real Bitcoin.