The post Bitcoin Futures Traders Increase Shorts as Fed Rate Cut Looms: CME Analysis appeared on BitcoinEthereumNews.com.

Bitcoin futures traders on the Chicago Mercantile Exchange (CME) have increased their short positions ahead of the U.S. Federal Reserve’s upcoming interest rate announcement. Analyst David Zimmerman from K33 Research points out that this surge in short positions reflects a cautious approach due to expectations of market volatility. “CME active market participants have upped their short exposure by 5,500 bitcoin, signaling a trend towards bearish sentiment,” stated Zimmerman. Cryptocurrency market on edge ahead of Federal Reserve interest rate decision, as traders brace for potential volatility. Traders Increase Short Positions on CME Bitcoin Futures In anticipation of the Federal Open Market Committee (FOMC) announcing its latest interest rate decision, traders on the Chicago Mercantile Exchange have significantly ramped up their short positions on bitcoin futures. Analyst David Zimmerman from K33 Research highlighted that the increased short exposure by approximately 5,500 bitcoin in the past two days is a clear indication of the market’s cautious stance. This counteraction comes as interest rate traders predict a substantial 50 basis-point cut, the first reduction of its kind in four years. Falling CME Futures Premiums and Rising Perpetual Futures Funding Rates According to Zimmerman, the CME bitcoin futures market is experiencing a notable drop in premiums, reaching a nine-month low. This trend is often interpreted as a response to prospective rate cuts and associated economic uncertainty. The reduction in futures premiums on CME, which have dipped below 5% for the first time since January, combined with increasing perpetual futures funding rates, typically spells a negative short-term market outlook. Such a dynamic may likely heighten the volatility anticipated from the FOMC meeting. Economic Impact and Market Projections While an interest rate cut generally enhances liquidity for risk assets, there is still apprehension about a potential economic downturn. Zimmerman pointed out that the Fed’s move to cut…

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Filed under: News - @ September 18, 2024 3:21 pm