Hedge Funds Heavily Betting For Bitcoin To Fall: Will This Strategy Fail?
10 Juni 2024 - 7:30PM
NEWSBTC
Looking at the formation in the daily chart, there is no relief for
Bitcoin at spot rates. Following the flash crash on June 6, prices
reversed sharply from the $72,000 level, further highlighting the
significance of the liquidation level. In the past, Bitcoin prices
have recoiled from this level, with analysts expecting a short
squeeze to print once this line is breached. Hedge Funds Are Short
Selling Bitcoin Futures: Will This Strategy Backfire? Amid this
slip, one analyst on X notes that hedge funds and Wall Street firms
have increasingly taken short positions on Bitcoin futures
contracts, expecting BTC prices to plunge. Though they could be net
long on the spot market, taking advantage of the fee differential,
the trader notes that this strategy is risky. If anything, massive
losses could occur should prices unexpectedly spike. Between the
current price point and slightly above all-time highs at $74,000,
exchange data and trader notes show $12 billion worth of short
positions on BTC futures. This move means that hedge funds are net
bearish, and since everyone knows the big boys of Wall Street are
shorting, this move could backfire spectacularly. Even
so, hedge funds selling BTC futures are nothing new. Often, hedge
funds tend to short the futures of a given product and
simultaneously buy the spot markets, taking advantage of the carry
trade to profit. Related Reading: Shiba Inu Price Could Skyrocket
By 1,100%, Predicts Analyst The problem is that this hedging tactic
is popular in traditional finance and has been profitable before.
On the other hand, Bitcoin is a new asset class that is outside the
traditional finance system. Accordingly, the strategy might not pan
out exactly as expected, leading to massive losses. BTC Fragile But
Spot ETF Issuers On A Buying Spree Whether Bitcoin will recover
from spot rates remains to be seen. As it is, BTC is under immense
selling pressure, dropping from $72,000. Although the uptrend
remains, buyers are yet to reverse the June 6 losses, meaning the
path of least resistance in the short term is southwards. A break
below $66,000 would completely wipe out gains of May 20, signaling
a trend shift. Related Reading: Notcoin (NOT) Develops Falling
Wedge Triangle: Rally Looms? Still, buyers are upbeat about what
lies ahead. Last week, despite the contraction, all spot Bitcoin
exchange-traded fund (ETF) issuers in the United States have been
on a buying spree. According to HODL15 Capital, in the first week
of June, they added 25,729 Bitcoin. This stash is equivalent to
roughly two months’ worth of mined coins and is the highest weekly
buying activity since mid-March. Then, BTC rose to all-time highs
of around $73,800. Feature image from DALLE, chart from TradingView
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