Institutional Traders Remain Bearish on Bitcoin; Factors to Consider

Bitcoin’s lackluster trading over the past ten weeks is showing no signs of concluding anytime soon.

Although the cryptocurrency has been able to see some volatility within its long-held trading range, it has not been able to develop any clear directionality throughout the past couple of months.

The price action seen between $9,000 and $10,000 as of late does seem to favor sellers, however, as BTC has been consistently setting lower highs.

This trend can even be seen this morning when the benchmark crypto rallied up to highs of $9,400 before facing a swift rejection that sent it down towards $9,100. This movement came on the heels of its recent rejection at $9,500.

Data regarding the commitment of traders on the CME shows that institutional investors are largely short on Bitcoin. This signals that they anticipate the ongoing consolidation phase to end in a downside movement.

Bitcoin Shows Signs of Weakness as Analysts Forecast “Nasty” Price Action 

At the time of writing, Bitcoin is trading down marginally at its current price of $9,220. Earlier this morning, buyers propelled it to highs of $9,350.

At this price level, bulls were met with a significant influx of selling pressure that helped catalyze a selloff that sent it reeling to $9,100.

Buyers are now attempting to defend against the crypto breaking below the crucial support that has been established at $9,200.

It is important to note that BTC’s daily high of $9,350 marks another lower high while looking towards the cryptocurrency’s multi-week price action.

This elucidates underlying weakness amongst the crypto’s buyers and could suggest that further downside is imminent in the coming days and weeks.

As NewsBTC reported yesterday, one analyst recently explained that $8,600 is the critical support he is watching in the near-term.

He notes that a break below here could cause BTC to see some “nasty” price action that potentially marks the start of a fresh downtrend.

“I think if we broke down from here and broke below $8600 then I think we could quickly turn bearish and start to see some nasty price action,” he said.

Image Courtesy of Cactus. Chart via TradingView.

Institutional Traders are Widely Short on BTC 

According to the CME’s Commitments of Traders Report (COT) – the vast majority of institutional traders using the platform are net-short on Bitcoin.

Crypto data aggregator Unfolded spoke about this, pointing to a chart showing the positions held by retail, professional, and institutional traders.

“07 – July CME $BTC Commitments of Traders Report (COT). Open Interest: 8,165.”

Image Courtesy of Unfolded. Chart via TradingView.

If Bitcoin is unable to post any type of potent reaction to the support it has at $9,000 and $8,600 in the days and weeks ahead, it could see significant downside once its consolidation phase resolves.

Featured image from Shutterstock.

Charts from TradingView.

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