Cryptocurrencies under pressure again. Institutions remain bearish 📉

The price of the major cryptocurrency has been receiving a narrow range between $16,000 and $17,000 for several days, signaling an imminent, renewed spike in volatility. Meanwhile, the record low in monthly bitcoin futures traded on the Chicago Mercantile Exchange indicates that institutions are increasingly willing to take a bearish stance, which could create an opportunity for arbitrage. 

• The risk of a domino effect of the cryptocurrency market is still alive. Another bankrupt entity turned out to be BlockFi, the situation of the AAX cryptocurrency exchange is still uncertain;
• The number of active futures contracts on the CME jumped nearly 37% to 93,000 BTC in November, suggesting a huge influx of capital on the shorting side of the cryptocurrency market;
• The purchase of 315,259 shares of the Grayscale Bitcoin Trust for the first time since July 2021, the ARK Invest fund managed by Cathie Wood announced. Delivering record returns during the pandemic and focused on innovative technologies, Cathie Wood's ETFs have suffered huge losses as a result of declines among technology companies.

The chart shows the average daily premium/discount in BTC futures traded on the Chicago Stock Exchange. The record-breaking discount in futures contracts indicates that large-cap trading institutions are still confident of further declines. Source: Arcane Research

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• Analysts indicate that the number of institutional bearish positions in BTC futures on the Chicago exchange has caused backwardation i.e. a situation in which futures prices trade below the spot price.  Monthly CME Bitcoin futures traded at an average daily discount of about 3.6% to the spot price last week, according to data from Arcane Research. This is larger than the discount seen during the March 2020 coronavirus-induced crash and the steepest on record.

​​​​​​​Morgan Stanley analysts invariably focus on the $13,000 level, which they believe is the primary support for Bitcoin. Source: Bloomberg, Morgan StanleyBitcoin chart, H4 interval. The price of Bitcoin is again retreating to the area of $16,500 despite yesterday's attempts to climb above $17,000. The intersection of the SMA200 and SMA50 averages, which technical analysis calls the 'cross of death' signals a change in trend. Primary resistance continues to be the SMA50, which runs at $17,000. Source: xStation5

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