Wall Street’s Bitcoin bears quietly retreated despite recent plunge toward $80,000
CFTC data for Oct. 13 show rising spread legs lifted gross longs despite fewer outright longs, without establishing spot buying. Read the full story on CryptoSlateUnderstand the crypto stories that matter and what to watch next. Get The Catalyst in your inbox
Hedge funds cut their net bearish Bitcoin futures bets nearly 15% even as the cryptocurrency tumbled toward $80,000.
Data from the Commodity Futures Trading Commission (CFTC) showed leveraged funds held a net short position equivalent to 30,611 BTC as of Oct. 13, down from 35,903 BTC a week earlier.
The 5,292 BTC reduction came as Bitcoin fell nearly 3% during the reporting period, from about $85,600 on Oct. 6 to $83,100 on Oct. 13. The cryptocurrency briefly slipped below $81,000 as rising Treasury yields, weakening institutional demand, and a global technology stock selloff weighed on risk appetite.
The decline gave bearish traders opportunities to take profits, while repeated price reversals increased the risk of holding leveraged positions.
CFTC figures showed that outright short positions declined by 6,437 BTC to 59,458 BTC, compared with a smaller reduction of 1,145 BTC in outright longs to 28,847 BTC.
The faster decline in shorts narrowed the bearish imbalance, although leveraged funds maintained more than twice as much outright short exposure as long exposure.
Bitcoin's weakness accelerated on Oct. 7 as Treasury yields approached 5.3% and expectations of additional Federal Reserve tightening weighed on speculative assets.
Elevated oil prices reinforced concerns about persistent inflation, while higher bond yields increased the relative appeal of interest-bearing investments.
The cryptocurrency subsequently fell below $81,000 on Oct. 8, extending a retreat from levels near $87,000 earlier in the month. The decline weakened confidence in Bitcoin's late-September recovery, particularly as demand through US-listed exchange-traded funds deteriorated.
Related ReadingMarket volatility intensified again on Oct. 13 as a sharp selloff in South Korean semiconductor stocks spread through Asian equities.
As CryptoSlate reported, South Korea's KOSPI plunged about 5.5%, with Samsung Electronics and SK Hynix suffering heavy losses amid concerns about the financing and profitability of artificial intelligence investments.
The selloff coincided with approximately $813 million in cryptocurrency liquidations over 24 hours, including $686.72 million in bullish positions. Bitcoin briefly fell below $81,000 before rebounding above $83,000.
The resulting price swings made large directional positions increasingly risky, giving leveraged funds an economic incentive to reduce exposure even as Bitcoin remained under pressure.
While leveraged funds reduced outright bearish exposure, they increased positions involving offsetting long and short Bitcoin futures contracts.