The longer-term Bitcoin futures contracts premium has continuously increased together with top traders’ net exposure. That indicates a bullish sentiment for June 26’s expiry. Investors are majorly attracted by the $1.1 billion Ether and Bitcoin options expiry that is scheduled to happen on Friday. However, they might be missing some relevant indicators of the futures contracts.
June 26 is also the last trading day for most weekly and monthly Bitcoin futures that totals over $665 million currently. For the futures participants, shorts (sellers)and longs (buyers) are always balanced. Therefore, no price impact will be expected. Despite all that, some more vivid indicators are constantly telling the signals of professional traders’ sentiment.
The recent June 22 pump of $300 to $9,700 might have been a small indicator of the forthcoming trend. Also, the long-term futures contracts premium provide a similar story. That is measured by comparing the July versus June contract price 1-month premium together with the September versus June 3-month premium.
Some crypto exchanges offer more data through the analysis of top traders’ positions or the consolidation of clients’ net exposure on futures, swaps, and spot positions. Today, both OKEx and Binance are showing similar bullish data which indicates that professional traders are skewed bullish.
The charts show open interest for all the future contracts that include perpetual. OKEx brings in the biggest figure at about $900 million. The Chicago Mercantile Exchange (CME) currently handles around $450 million.
Long-Term Futures Contracts Premium
The data shown in this chart obtained from Skew indicates that the rolling 3-month ahead futures contract premium has increased steadily over the last several months. This current market situation is known as contango. It is a strong bullish indicator since sellers are demanding more money to postpone settlement.
That is the exact opposite of mid-April when Bitcoin failed to smash the $7,500 resistance and it dropped back to the $6,800 level. The move resulted in some temporary bearish sentiment.
Not even the crash of May 10 that liquidated $200 million worth of Bitcoin longs caused such havoc in the indicator. The price dropped to $8,100 at the time.
Open Interest Average Price
Today, there are $665 million in futures contracts scheduled to expire this Friday. This does not include perpetual and quarterly contracts that will mature in September. Thus, the difference to Skew’s $4 billion aggregate open interest.
The Chicago Mercantile Exchange (CME) leads the group when it comes to the analysis of June 26’s expiry exclusively with $216 million. Remember that this regulated exchange has much wider transparency and less likely inflated numbers than a majority of the crypto derivatives venues.
According to the chart above, the CME open interest was created during April and early May, while the average price during the period is $8,300. Most of the buyers are comfortable at the $9,400 level and potentially use these profits to prop up prices even further.
Clients Net Long/Short Ratio
Some exchanges offer useful information on clients’ net exposure; either through measuring top clients’ positions or even consolidating data from spot and derivatives markets.
Binance shows the last 30 days data on top clients long/short positions, showing an uptick in this index.
That indicates Binance’s most active futures contract accounts are 15% skewed to the net long side; which is a bullish indicator.
OKEx exchange offers to a small degree different data sets which consolidate exposure from both the spot markets and derivatives. Although that index offers a similar trend to Binance; the long/short ratio has now recovered from 0.85 to the current reading at 1.08. This information shows an 8% net exposure that favors longs.
Extra Factors To Consider
This market is not entirely made up of futures with fixed settlement dates. The opposite is true. A majority of the open interest relies heavily on perpetual contracts that are also referred to as swaps. Part of the June 26 $665 million open interest figure might also get rolled over to longer-term or perpetual contracts.
Although it is not possible to determine professional traders’ net exposure towards expiry accurately, the above indicators of contango, open interest average price, and the top traders’ net exposure are all pointing to the same bullish sentiment.
There is still some time for a market sentiment change. Nonetheless, it is safe to assume that a majority of the professional traders are constantly positioning themselves for a neutral to positive price action over the next several days.
Consider The Expiry Calendar
Both Huobi and OKEx weekly contracts mature June 26 at 8:00 AM (UTC). Also, the CME futures will expire on June 26 at 3:00 PM (UTC) and BitMEX quarterly June contracts also will expire at 8:00 AM (UTC).