Bitcoin Futures COT Data Show Bottoming For Prices

The "non-commercial" category of Bitcoin futures traders in the COT Report data have moved to a sizable net long position. That is a bottoming sign for Bitcoin prices.

The Commitment of Traders (COT) Report is published every Friday by the CFTC, reflecting traders' positions held as of the preceding Tuesday.  That report breaks down traders into 3 categories:

• Commercial traders are ones who produce a commodity, or use it in their trade or business.  So for wheat futures, think of a large wheat farmer or Cargill, for example.
• Non-commercial traders are large speculators, so think of hedge funds.
• Non-reportable traders are ones whose position sizes are so small that the CFTC does not require them to report their positions individually.  These are usually the hot money traders, chasing up moves and fleeing selloffs.

For most types of futures contracts, the commercial traders are considered the "smart money" traders.  But it works differently in Bitcoin, where the commercial category is not much of a factor.  In Bitcoin futures, the non-commercials are usually the smart money, especially when they move to a large skewed position as a group, either net long or net short. 

Bitcoin prices spiked to an all-time high of $109,340 on Jan. 20, 2025, which was inauguration day for President Trump, and have since dropped by more than 20%.  In response to that price drop, the large speculators in the non-reportable category have moved to a big net long position as a group, as shown in the chart above.  They were just a little bit more long than this back in September 2023, which marked a great low for Bitcoin prices and the start of a powerful rally. 

We are not guaranteed the same exact outcome this time.  All COT Report data merely reflect a sentiment "condition".  COT data do not give trading "signals", and it is possible for an extended condition like this to persist for a long time before it finally decides to matter.  It is worth noting that this same category of traders moved to a big net short position starting just before the November 2024 elections, and it took a long time before they were finally proven right in that move.  So no one should enter into any trade just because of these nor any other COT Report data.

What this represents is a setup, a condition which ought to matter at some point.  And it should result in an up move in Bitcoin prices that is of a meaningful magnitude.  But these data will not tell us when that move is going to happen.  For that, one must watch the charts and see when a trend change is being revealed by other indicators.

Every Friday in my Daily Edition, I feature several charts of the most relevant COT Report data that week.  To see samples and get subscription information, visit https://www.mcoscillator.com/market_reports/.