According to recent tweets from whale insiders, Ark 21Shares has sold 559.85 Bitcoin [BTC], worth about $64.4 million, which has raised concerns as signs of cooling appear in the Bitcoin derivatives market.
Ark 21Shares' actions may be just the tip of the iceberg. Open interest (OI) tracking unsettled futures and options contracts has declined to about $81 billion, the lowest level in a week.
This indicates that overall institutional interest is waning, and as institutions realize profits from the recent Bitcoin bull market, further short-selling may soon occur.
The open contracts and unrealized profits of BTC mean...
The significant drop in Bitcoin's open positions indicates that traders and investors are closing positions rather than increasing them. This behavior typically signals caution in the market.
Large institutions appear to be reducing risk by pulling out of leveraged long positions. This suggests a lack of strong confidence in the current rebound, leaning more towards short-term risk aversion.
According to AMBCrypto's analysis of CryptoQuant data, net unrealized profits have fallen to their lowest level this week. This indicates that long-term holders and major participants are locking in profits, thus exacerbating bearish sentiment.
Increased profit-taking may trigger a short squeeze, potentially leading to a short-term price adjustment before any new bullish momentum emerges.
Profit-taking and short positions
The key question for potential long holders is whether the recent pullback in Bitcoin indicates that institutions are preparing to short, or is it merely a profit-taking phase after a long-term bullish rally.
The sell-off by Ark 21Shares has further intensified bearish expectations, but short futures positions have not increased significantly. This suggests that institutional investors may be rebalancing their portfolios rather than being outright bearish.
At the time of writing, Bitcoin remains in a balanced state. With a high proportion of supply still in profit and ongoing institutional participation, the broader long-term narrative remains intact.
However, cautious positioning has dampened upward momentum.
If open positions and unrealized profits continue to decline, Bitcoin may face further short-term downward pressure.
On the other hand, a rapid recovery in derivatives activity may indicate that institutions are preparing for another rise rather than completely giving up on the upward trend.
