Institutional Investors Remain Conservative, Offshore Investors Active
The influx of spot Bitcoin ETF reflects demand, not hedging
Macro events are short-term key
According to a report by The BlocK, analysts Vetle Lunde and DeFi analyst David Zimmerman of 33 Research stated in a report on Tuesday that the leverage of Bitcoin perpetual contracts has reached a yearly high of 260,000 BTC. The analysts wrote in the report:
33 Research analysts stated that after the spot Bitcoin 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 of Bitcoin and Ethereum to drop from around 12% last week to 6% on Tuesday, the lowest level since May 23.
However, while the short-term trading data from CME suggests that institutional traders are becoming more conservative, the open interest of perpetual contracts remains at historical highs, indicating that offshore investors in the United States are still highly exposed.
Although the direction of Bitcoin prices is still unclear, the U.S. spot Bitcoin ETF recorded its highest net inflow in three months last week, reaching 25,917 BTC ($1.8 billion). It raises doubts whether the growth of ETF comes from CME’s basis trading activities (arbitrage between spot and futures markets), indicating that the influx of ETF may not be “net neutral”. In response, analysts from 33 Research stated:
“This observation is partially correct, but far from reflecting the entire situation, as since May 1, the BTC added to ETF exceeds CME OI by 36,000, showing that most of the ETF inflow comes from participants aiming to establish a bullish direction.”
The correlation between Bitcoin and the U.S. stock market has reached an unprecedented level in 18 months, with last week’s 30-day correlation between Bitcoin and the Nasdaq rising to 0.64 for the first time since 2022. Given the influence of macro event risks on the U.S. stock market, this week’s CPI inflation data and interest rate decisions are likely to be key factors in determining the future trend of the cryptocurrency market.
33 Research analysts stated:
“The FOMC dot plot, as well as Chair Powell’s forward-looking guidance during the press conference, may be the most significant price-driving factors, as Bitcoin begins to pay attention to market interest rate expectations.”
At the time of writing, Bitcoin briefly fell below $66,000. The exchange rate of Ether relative to Bitcoin also fell again, however, 33 Research reiterated its bullish stance on Ethereum in the report, expecting its performance relative to Bitcoin to strengthen during the summer, based on the approval of the Ether spot ETF.