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Bitcoin Futures Contracts Show Contrasting Positions between Hedge Funds and Institutional Investors

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by Godfrey Benjamin · 3 min read
Bitcoin Futures Contracts Show Contrasting Positions between Hedge Funds and Institutional Investors
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Bitcoin Futures contract has at this time revealed a differing behavior between hedge funds and institutional investors in a scenario that seems to stir market analysts amusements.

Per the data published by the Chicago Mercantile Exchange (CME), institutional ivestors are embracing the Long Bitcoin Futures contracts while the hedge funds are diversely going Short.

The CME data shows that the Bitcoin Futures long contract held by institutions is currently at its all-time high. This position gives an inclination that the Institutional investors have a more bullish expectation on the price of Bitcoin (BTC) in the long term and the continuous investment in the premier digital asset largely indicates the practical backing of this bullish expectation. Conversely, the short positions being backed by hedge funds has been explained in different ways by analysts in the space.

Hedge funds are known to generate revenue for their clients through different means including a bet on crypto derivatives without the fear of risks. The short position by the hedge funds has also been seen as a means to provide liquidity to institutional investors entering long bitcoin futures contracts on exchanges.

Bitcoin Futures and Institutional Investment Rise Correlates

We have seen a surging interest amongst institutional investors in recent times as many continue to show backing for bitcoin (BTC) over other digital currencies. Coinspeaker reported earlier that MicroStrategy Incorporated (NASDAQ: MSTR) remains one of the publicly listed firms to pump its excess liquidity into Bitcoin. The billion-dollar software firm noted that it would be investing an excess of $250 million in bitcoin and other assets in the next two months following the current inflationary uncertainties plaguing the U.S. dollar.

“We will seek to invest up to another $250 million over the next 12 months in one or more alternative investments or assets which may include stocks, bonds, commodities such as gold, digital assets such as Bitcoin, or other asset types,” MicroStrategy President Michael J. Saylor said in a statement and as seen by the Motley Fool.

Additionally, San Francisco-based financial services and mobile payment company Square Inc (NYSE: SQ) also pumped about $50 million to buy 4,709 Bitcoin (BTC) earlier this month. The total amount of cash invested by the firm represents about 1% of its total assets as of the end of Q2 2020. Grayscale CEO Gary Silbert also affirmed this when he noted that the firm’s Assets Under Management (AUM) has hit its recent all-time high of $6.4 billion showing a healthy plunge into the bitcoin investment space by institutional investors.

The crypto sphere has seen a continued increase in the show of support for bitcoin by Institutional investors and it suffices to say that the moves may have a profound effect in spiking the price of bitcoin in the near and long term.

Bitcoin News, Commodities & Futures, Cryptocurrency News, News
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