Wall Street liquidity radar: Institutional bets skew bearish as U.S. Bitcoin discount persists

U.S. Bitcoin sentiment remains tilted toward the bearish side. Institutional investors hold more downside bets, while spot Bitcoin continues to trade at a discount.

Institutional futures positioning and U.S. spot pricing both point to caution around Bitcoin. Lower trading activity through an institutional venue adds another signal in the same direction.

As of October 13, leveraged funds on CME held 5,520 long contracts and 11,364 short contracts, putting shorts at 2.1 times longs. The CFTC data are released weekly on Fridays and may lag current positioning by several days.

This means bearish positions outnumbered bullish positions by 2.1 to 1. The imbalance suggests that institutional investors, including hedge funds, were positioned more heavily for a decline than for further gains in Bitcoin.

The Coinbase premium, a gauge of U.S. spot demand, stood at -0.1259% on October 17. It remained negative after readings of -0.0806% on October 13, -0.1417% on October 14, -0.1392% on October 15 and -0.1416% on October 16.

A negative premium means Bitcoin is trading more cheaply on Coinbase than in offshore markets. The discount narrowed from the previous day but remained below zero, indicating that U.S. buying demand was still relatively weak.

Bitcoin: Coinbase premium (%)

Coinbase Prime recorded trading volume of 5,159.84 BTC on October 16, down 27.3% from 7,097.03 BTC the previous day. Its 24-hour dollar volume was about $386.23 million.

Volume on the institutional trading venue reflects how much Bitcoin clients actually traded. The sharp decline indicates weaker institutional participation, although volume alone does not show whether buying or selling dominated.

The VIX, a measure of U.S. equity-market anxiety, reached 19.99 on October 16, up 3.53 points, or 21.4%, from 16.46 the previous day. It rose from 14.84 on October 9 to 15.21 on October 12, 15.27 on October 13 and 16.87 on October 14, before easing to 16.46 on October 15 and rebounding.

A VIX reading below 20 generally signals relatively calm U.S. equity markets, while a move above 20 indicates greater stress. The index remained just under that threshold, but its rapid rise could strengthen risk aversion and create a less favorable backdrop for crypto assets.

The U.S. Dollar Index, which tracks the dollar against major currencies, stood at 101.84 on October 16, down 0.16 from 102.00 the previous day. The 10-year U.S. Treasury yield was 5.10% as of October 15. A weaker dollar may ease some pressure on risk assets, but the elevated yield remains a headwind for crypto and equities.

U.S. markets remain cautious toward Bitcoin. Bearish institutional positioning, a persistent spot discount and lower Coinbase Prime volume are reinforcing that signal. Key indicators to watch are whether the Coinbase premium turns positive and whether the VIX crosses above 20.

Editor's note Wall Street Liquidity Radar tracks how U.S. investors view Bitcoin through four indicators: CME leveraged-fund positioning, the Coinbase premium, the VIX and Coinbase Prime trading volume. Together, they provide a snapshot of short-term market direction and broader risk appetite.

This article is based on market data and chart analysis and does not constitute investment advice.