Expecting Bitcoin ETF, 'Smart Money' Hits Record Long on BTC

• Bitcoin Futures Smart Money Index Reaches New Heights
• CME's Bitcoin Futures and the Smart Money Index
• Record Highs Amid Spot ETF Expectations
• Resistance Expected for BTC and Potential Retracement

Bitcoin Futures Smart Money Index Reaches New Heights

Taiwan's data tracking platform MacroMicro reported a record surge in its Bitcoin$42,260 -0.64% futures smart money index to 13,711 last week. This rising enthusiasm for long positions indicates a bullish sentiment just days before the U.S. Securities and Exchange Commission (SEC) pronounces its resolution on spot ETF applications. Experts anticipate a typical sell the news effect once the ETF is launched.

CME's Bitcoin Futures and the Smart Money Index

Large-scale capital investments from institutional investors and savvy market participants are notably flowing into Bitcoin. This is in response to the SEC's impending approval deadline for a spot BTC exchange-traded fund (ETF). The smart money index, which monitors the variance between extensive investors' long and short positions open on the Chicago Mercantile Exchange, has thus escalated to 13,711. This surpasses the former high of 13,603, signifying an unprecedented net bullish placement by asset managers and other reportables.

Standard Bitcoin futures contracts on CME, sized at 5 BTC and settled in cash, are viewed as an accurate reflection of institutional activity. These contracts enable investors to gain exposure to the cryptocurrency in a regulated setting without owning it directly. Futures are derivative contracts that bind the buyer to buy and the seller to sell an asset at a pre-agreed price on a future date. A long position signals a bullish bias, while a short position indicates the opposite.

Record Highs Amid Spot ETF Expectations

The smart money index experienced a considerable increase this quarter, triggered by the probable establishment of a spot ETF and escalating hopes for a reduction in the Federal Reserve rate in 2024. The SEC is slated to make a decision by January 10 on the approval or rejection of an ETF that invests directly in Bitcoin, rather than in futures linked to BTC. Market watchers anticipate record inflows into the asset following the potential inauguration of one or more spot ETFs.

This optimistic outlook has propelled Bitcoin's value upwards by about 60% this quarter, which may lead to a potential sell the news action after the launch. Market experts cautioned that the demand for the BTC Spot ETF at the outset might fall short of market predictions, setting the stage for a typical 'sell the news' scenario in the second week of January.

Resistance Expected for BTC and Potential Retracement

There is an expectation of resistance for BTC within the $45,000-$48,500 range and a possible retracement to $36,000 levels before the upward trend continues. Despite this, the bullish trend is expected to resume prior to the mining reward halving event in April.

Edited by Jonathan Stoker