In this news:
Close-up photo of Ethereum silver coin (ETH) on black background.
Some might consider the phrase ‘smart money’ within a crypto investing context to be an oxymoron. But there is plenty of institutional trading interest in digital assets, perhaps in part because for many hedge funds volatility equates to profit making opportunities, even if the trading is irrational.
In fact there are plenty of big, smart institutions trading crypto including Citadel Securities, Susquehanna International and Jane Street Capital that are fully engaged in crypto markets today. Since 2018 the Commodity Futures Trade Commission publishes a weekly Commitment of Traders (COT) report which captures crypto trading trends in an attempt to bring transparency to this sometimes murky market..
THE LATEST COT DATA
In COT analysis, sometimes what’s important is the number of derivatives contracts or the notional value of these contracts, and that something can also be the number of firms jumping on a particular trend. The number of what the COT considers “large” institutional holders varies by contract, but in the crypto world this year there are an average of 38 firms holding long positions in ethereum futures (compared to an average of 74 firms holding long bitcoin futures). Since 2023, the number of firms buying ETH futures has risen ahead of price rallies in the spot market, and has decreased ahead of ETH price selloffs, supporting the hypothesis that smart money is well… smarter than the wider market.
The Forbes analysis of the latest data ending on Mar 25 suggests that smart money considered the price of Ethereum that day ($2,068) as being oversold, and boosted long positions for two of the past three weeks. Ethereum price hasn’t budged much since March, so it stands to reason that institutional investors continue to think the time is ripe to buy ETH. Relative to bitcoin and many other crypto currencies eth has been in the dumps. Over the last three years bitcoin’s price, even at its current $82,244, has more than doubled while the price of ETH is down 32%.
Though the price of Ethereum could fall further, the futures data indicates that institutional traders believe it could soon trade as high as $2400 - a 22% increase over today’s price.
The Number of long ETH Futures Is Rising
Illustration by Javier Paz for Forbes
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