Just when many cryptocurrency market analysts thought Bitcoin would be able to build support around the $12,000 level, traders began exiting their positions and raking in profits before Wall Street opened its weekly session on Monday morning. By late Sunday, BTC/USD fell from $12,000 all the way below $11,000, and it had failed to recover by Tuesday.
At the Chicago Mercantile Exchange, Bitcoin futures traders mostly shrugged off the volatile drop; in fact, many of them did not characterize the 48-hour bearish action as being volatile, at least not when considering how the BTC/USD has moved in recent years. If anything, Bitcoin futures are currently breaking records in terms of open positions. Just one day before Bitcoin traders started liquidating their market positions on Sunday, CME traders were loading up on futures contracts.
The lowest aggregate of open Bitcoin future contracts during the month of July was $3 billion. The highest in early August was $5.6 billion, which was even higher than it was in February, a time when a Bitcoin rally looked very likely but was frozen by the World Health Organization declaring SARS-CoV-2 as a pandemic issue. Over the last three weeks, Bitcoin open positions at the CME have surged by more than 125%, thus suggesting that more institutional investors are warming up to Bitcoin futures.
CME traders are mostly long on Bitcoin, but most of them are parked close to the $12,500 range, which is pretty reasonable at this time. Technical analysts feel that the real support line is at $10,500 and not at the more bullish $12,000 level. One explanation as to why Bitcoin is drawing more interest at the CME is that Wall Street has been enjoying irrational bullish rallies that seem to be out of touch with what is happening to the American economy.
Estimates by the Federal Reserve suggest that the gross domestic product of the United States could lose more than 30% this year, but this does not seem to be on the minds of Wall Street traders. As long as this view continues, more cautious traders will look at alternatives such as Bitcoin.