MacroMicro’s smart money index for Bitcoin futures surged to a record level of 13,711 last week, surpassing the previous peak just days before the SEC’s decision on spot ETF applications. Despite the bullish sentiment, market observers anticipate a “buy the rumor, sell the news” scenario post-ETF approval.
The index, based on the CFTC’s weekly Commitment of Traders report, suggests institutional investors are heavily favoring Bitcoin as the SEC’s deadline for spot-based Bitcoin ETF approvals looms. The record net long positions by asset management firms and other reportables underscore this trend.
CME’s standard Bitcoin futures contracts, sized at 5 BTC each, offer institutional investors a regulated platform to invest in cryptocurrencies without owning the actual assets. These derivative contracts obligate buyers to purchase and sellers to sell the underlying asset at a predetermined price on a future date, with long positions indicating a bullish outlook and short positions suggesting the opposite.
The smart money index has risen sharply this quarter, propelled by narratives around spot ETFs and expectations of a Fed rate cut in 2024. The SEC’s January 10 deadline to approve or reject an ETF investing in Bitcoin, rather than futures, has been a catalyst for this surge, with observers anticipating record inflows into the asset class following the potential launch of one or more spot ETFs.
The quarter’s approximately 60% rise in Bitcoin prices has opened the possibility for a “buy the rumor, sell the news” investment strategy following the launch. QCP Capital’s market analysts warn that initial real demand for the ETF may fall short of market expectations, potentially leading to a classic sell-off in the second week of January.
Analysts predict a resistance zone for Bitcoin between $45,000 and $48,500, with an expected pullback to around $36,000 before the uptrend continues. They also suggest the bullish momentum may persist until the block reward halving in April.