CME Net Short Exposure Reaches ATH: Why Institutions Are Bearish on Ethereum
29 Juin 2022 - 12:01AM
NEWSBTC
Ethereum has seen some selling pressure today and has rolled back
on a portion of its gains. The cryptocurrency was bouncing back
from below the $1,000 levels but has found hurdles on lower
timeframes. Related Reading | Outflows Rock Bitcoin As
Institutional Investors Pull The Plug, More Downside Coming? At the
time of writing, ETH’s price trades at $1,166 with a 3% loss in the
last 24 hours and a 3% profit in the past 7 days. Ethereum and
Binance Coin were two of the best-performing assets in the crypto
top 10 market cap. Their gains were able to pull back Bitcoin’s
dominance which was close to reclaiming 50% of the sector’s total
market cap. The second crypto in the top 10 decoupled from Bitcoin,
while the latter stuck, ETH moved to the upside. When Bitcoin lags,
and Ethereum leads, is often considered an indicator of potential
downside. In 2021, when Ethereum moved on its own, the crypto
market experienced downside price action. According to Arcane
Research, Ethereum not only moved on its own on the spot market,
but the futures market saw some interest action. The Chicago
Mercantile Exchange (CME) ETH futures contracts have been trading
at a discount when compared to ETH’s spot price. This divergence
seems to hint at future losses for Ethereum. As seen below, the ETH
futures contract has been trending to the downside since the
beginning of June 2022 with an increase in open interest. This is
the first time since the launch of this investment product that
there is a discrepancy with its spot price. Arcane Research noted
the following on why this could be bad news for the second crypto
by market cap: We also note that the Ether-denominated open
interest on CME climbed to the highest level since early April on
Thursday while seeing a slight decline over the weekend. According
to the most recent CFTC Commitments of Traders reports, assets
managers are shorting Ether heavily (…). Are The Ethereum Shorts
Justified? The Arcane Research report claims this is the first-time
institutions have been this short on Ethereum. These entities have
positions of almost $40 million on the CME trading platform with a
slight reduction in the past seven days. Ethereum is currently in
the process of migrating from a Proof-of-Work (PoW) to a
Proof-of-Stake (PoS) consensus algorithm. Recently, ETH core
developers announced the delay of a component that will lead to
this upgrade. Called the “Ethereum Difficulty Bomb” is the
mechanism that will enable people to mine ETH. The ETH core
developers claimed this will have no impact on the migration, but
the market could have a different perspective. In addition, the
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler
claimed that he is only willing to acknowledge Bitcoin as a
commodity. He refused to speak about other cryptocurrencies but
claimed the majority fits the description of a security. Related
Reading | Why Crypto Is “Likely To Dump” As It Lags The
S&P 500, Expert Says If Ethereum is classified as a security,
the decentralized finance (DeFi) and non-fungible tokens (NFT) and
other sectors could be impacted and forced to comply with new
regulations. Remains to be seen if these institutions can profit
after the crypto market has experienced a massive crash.
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