Institutional Bitcoin Futures Activity Climbs on CLARITY Act Markup

Institutional involvement in Bitcoin continues to grow as they appear to be gaining confidence. Their exposure appears to be growing through Bitcoin futures activity, despite ongoing policy uncertainty.

Professional Investor Exposure Growing Through BTC Futures Activity

Trading in Bitcoin futures on the Chicago Mercantile Exchange (CME) is occurring at approximately $95,600 with consistent volume. Volume on CME has historically reflected the position taking by institutional investors versus short term sentiment from retail.

Price action in Bitcoin futures recently showed that the asset has filled a key gap area on the CME at $94,800. Filling gaps is historically seen to eliminate or diminish technical uncertainty, and ultimately improve stability to the near-term market structure.

Further evidence supporting institutional confidence in Bitcoin is found in the U.S. government’s continued efforts to establish a Strategic Bitcoin Reserve policy formally. To continue to trend upward, analysts say that the price of BTC needs to stay above the current trading level of $94,000.

According to Ash Crypto, a crypto-analyst, if BTC stays above the price range and closes out the week in this area, it could very well set up the potential for BTC to rise further.

Institutions looking to manage their risk using approved products are still taking a close look at signals coming from the CME. The ongoing high volume of trade indicates that traders are continuing to keep their exposure to the top cryptocurrency.

Although the confidence being shown by investors in the Bitcoin futures markets is high, expectations of higher prices are also beginning to build. For example, prediction markets are showing confidence in Bitcoin price moving higher.

Do Regulatory Developments Support Market Confidence in Bitcoin?

Polymarket data shows that the highest implied probabilities for Bitcoin to $100,000 in January exist. Also, the implied probabilities for a move to $105,000 have gone up while all other possible outcomes have much lower implied probabilities.

This shows that the majority of traders perceive little to no immediate risk to the price of BTC. As a result, the views of these active groups of traders are likely to be representative of many of the viewpoints that exist in the markets.

At the same time, U.S. regulatory policy regarding cryptocurrencies is currently at a pivotal moment. A markup hearing on the proposed CLARITY Act is scheduled to be conducted by the U.S. Senate Committee on Agriculture, Nutrition, and Forestry on January 27th.

Lawmakers indicate that the proposed legislation was developed through several months of bipartisan negotiation. They plan to make the language of the proposed legislation public before the markup hearings begin.

Senator John Boozman said he believes the committee will be marking up the legislation at a time when it can be done with as much transparency as possible and when each part of the legislation can receive adequate review and consideration.

Are Bitcoin ETFs Showing the Impact of Policy Uncertainty?

After the markup, the committee will vote whether or not to send the legislation to the entire senate for consideration. Once the senate passes the legislation, it goes to the house for consideration, where it requires the signature of the president.

As with election timelines, political negotiations could affect how quickly these processes can occur. While Bitcoin futures are gaining momentum, flow data for U.S. spot Bitcoin ETFs show both positive and negative indicators. According to SoSoValue, U.S. Spot Bitcoin ETFs saw significant net redemptions in the last trading session.