Institutional investors Are Bearish on Bitcoin In Short to Medium Term

After seeing new lows of $3,700 in March, Bitcoin Revolution has given handsome returns. However, institutional investors have been getting bearish on the premier cryptocurrency yet again.

A bearish outlook

Institutional investors have a bearish outlook on Bitcoin in the short to medium term. The latest Commitment to Traders Report by CME suggests that institutional investors have increased the number of shorts in the past two weeks. CME hosts Bitcoin futures contracts on its platform. According to CryptoUnfolded, the aggregate position of institutional users of CME on Bitcoin has gone from -650 BTC to -1859 BTC. Such a massive increase in short positions was last noted in February this year, just weeks before Bitcoin crashed and reached new lows.

Bitcoin futures contracts on CME have been instrumental in predicting the direction of Bitcoin price volatility in the past. Just a week before institutional crypto solution Bakkt launched last year, the Commitment of Traders Reports suggested that large investors were net short on Bitcoin. As a result, they benefitted when the crash occurred after the launch.

Notably, Wall Street giant Goldman Sachs held a call for its clients recently on “Implications of Current Policies for Inflation, Gold, and Bitcoin.” It said that the Bitcoin does not generate cash flow like stocks and cannot provide a proper hedge against the risk of inflation as well. It also does not provide consistent benefits of diversification because of its unstable correlations.

Long term prospects still good

According to the report, the long-term outlook on Bitcoin is not bearing. There is enough data and anecdotal evidence to suggest that institutional players are building up their repertoire for long-term positions, even if they are looking for bearish positions in the short to medium term.

Kevin Rooke, a technology analyst, said that between May 11 and May 27, Grayscale Investments accumulated abut 18,910 Bitcoins for its clients. During the same time, miners produced only 12,337 coins. This means that the digital asset fund management company added more to its already existing $400 million Bitcoin reserves in Q1 2020. The company suggests that a majority of its clients are institutional investors like hedge funds.

Hedge fund manager Paul Tudor Jones is also bullish on Bitcoin in the long run. He said that as governments and central banks enact more monetary stimulus and fiscal policies, there will be a clear need for scarce assets like Bitcoin.