Bitcoin Price Approaches $6,750 as Bearish Sentiment Subsides

Bitcoin’s price traded within a narrow range on Monday after data from the futures market revealed that institutions and speculators were no longer betting against the virtual currency, a sign that the worst of the downturn may be over.

BTC/USD Update

The bitcoin price was trading at $6,715 on Bitfinex, where it was little changed compared with the previous day. The digital currency’s trading range is currently $90, one of the narrowest of the year. BTC spent a great deal of Friday’s session hovering within an $80-$90 range before eventually surpassing $150 for the day.

Bitcoin has seen its value appreciate by 4.1% over the past seven days. The market peaked at $6,899 last Tuesday after Bitmex halted trading temporarily. In subsequent sessions, the bitcoin price reached a high of $6,799, which is more indicative of supply/demand forces.

At current values, the leading digital currency is valued at $116 billion for a 53.3% share of the overall market. Overall trading volumes in BTC averaged just $3.4 billion, which is well below levels generally observed during a market uptrend.

As the following chart illustrates, BTC’s technical indicators are strong. Relative strength is approaching 60 and the MACD is in positive territory. Immediate resistance is located at $6,950.

Bearish Calls Plummet

Non-commercial contracts of bitcoin futures plunged last week to the lowest level on record, according to the latest Commitments of Traders report issued by the U.S. Commodity Futures Trading Commission (CFTC).

The net position on bitcoin futures totaled -1,266 for the week ended Aug. 21. Short positions totaled 3,426 compared with 2,160 long positions. Shorts fell by 210 contracts compared with the previous week while longs rose by 56. Although the market is still net short, the latest data suggest bearish speculators were either flipping their positions or exiting the market entirely.

As Hacked reported last week, bitcoin futures have contributed to a sharp decline in volatility in the underlying spot price.  Volatility appears to be declining even faster as futures trading continues to pick up across the board.

The volume of bitcoin futures listed on CME Group doubled in July and rose in August, all while virtual currency exchanges such as Coinbase witnessed a sharp drop in turnover. Both CME and CBOE are under pressure as Intercontinental Exchange plans to launch its own bitcoin futures platform in November.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi