Crypto Markets Analysis: Crypto Long Positions Surging Among Asset Managers

Asset managers are adding to historically high long positions in bitcoin, the most recent Commitment of Traders (COT) report shows.

The report underscores investors’ surging confidence in crypto markets that has sent the price of the largest cryptocurrency by market capitalization up nearly 40% in January, and some altcoins by even higher.

The COT report, released weekly by the Commodity Futures Trading Commission (CFTC), provides a breakdown of holdings and open interest for traders of futures contracts, and is a measure of market sentiment. It shows the number of long, short and spread contracts in the Dealer/Intermediary, Asset Manager/Institutional, Leveraged Funds, Other Reportables and Non Reportable Positions categories.

The Asset Manager/Institutional category is comprised of larger institutional investors, i.e., pension funds, endowments, hedge funds and insurance companies.

The most recent bitcoin COT report shows that of the 7,734 open futures positions for asset managers, 7,671 are long positions with just 63 being short. Asset managers added 644 long positions as of Jan. 24 – the third consecutive week that they’ve built upon an already substantial long position.

As a distinct unit, asset managers with reportable futures positions are now 99.19% long, while making up 44.1% of long open interest among all reporting groups. This report is specific to asset managers with reportable futures positions to the CFTC. It does not include asset managers who have no exposure to cryptocurrencies.

The 7,671 open long positions represent an all-time high in the aggregate. The 99.1% long concentration for asset managers is an all-time high as well.

This trend reflects continued optimism for an asset that has already rewarded investors handsomely. Yet, a number of analysts recently have suggested the crypto market is due for a retreat amid conflicting macroeconomic signals, most notably the stubbornly resilient job market.

The COT findings could also suggest that asset managers have reached an extreme that is likely to reverse. Upcoming COT reports will indicate whether asset managers continue to go all-in on BTC, or whether they’ve decided to reduce exposure by going short.