Institutional investors are conservative, while offshore investors are active
The inflow of spot Bitcoin ETF reflects demand, not hedging
Macro events are short-term key
According to The BlocK report, analysts Vetle Lunde and DeFi analyst David Zimmerman from 33 Research stated in their report on Tuesday that the leverage of Bitcoin perpetual contracts has climbed to a yearly high of 260,000 BTC. The analysts wrote in the report:
K33 analysts stated that when the Bitcoin spot ETF saw a net outflow of $64.9 million on Monday, traders on the Chicago Mercantile Exchange (CME) began to reduce risk operations, causing the annualized futures premiums for Bitcoin and Ethereum to drop from about 12% last week to 6% on Tuesday, the lowest level since May 23.
However, while short-term trading data from CME indicates that institutional traders are becoming more conservative, the open interest in perpetual contracts remains at historical highs, indicating that US offshore investors are still highly exposed.
Although the direction of Bitcoin prices remains uncertain, the US spot Bitcoin ETF recorded its highest net inflow in three months last week, reaching 25,917 BTC ($1.8 billion), raising doubts about whether the growth of the ETF is driven by CME basis trading activities (arbitrage between spot and futures markets), which would mean that the inflow of the ETF may not be “net-neutral”. In response to this, analysts from K33 Research stated:
“This observation is partly correct, but it does not reflect the whole picture, as since May 1, the BTC added to the ETF is 36,000 more than the CME OI, indicating that most of the ETF inflow comes from participants looking to establish long positions.”
The correlation between Bitcoin and the US stock market has reached levels unseen in 18 months, with the 30-day correlation between Bitcoin and the Nasdaq rising to 0.64 for the first time since 2022 last week. Given the influence of macro event risks on the US stock market, this week’s CPI inflation data and interest rate decisions are likely to be key determinants of the future direction of the cryptocurrency market.
K33 analysts stated:
“The FOMC dot plot, as well as Chairman Powell’s forward guidance during the press conference, may be the most significant price drivers, as Bitcoin begins to pay attention to market rate expectations.”
At the time of writing, Bitcoin briefly fell below $66,000. The exchange rate of Ethereum relative to Bitcoin also fell again, however, K33 analysts reiterated their bullish stance on Ethereum in the report, expecting a stronger performance relative to Bitcoin during the summer, based on the approval of an Ethereum spot ETF.
