The position of Bitcoin futures among non-commercial traders is changing rapidly in long-term exposure, technical analyst Tom McClellan (editor of The McClellan Market Report) says that he arrived with “some urgency” in the latest report of the commitment of traders (COT) and the one that accompanied the significant results of the market before, alike.
Sharing a Bitcoin futures chart (value on a log scale) in conjunction with a non-trading net position, McClellan argued that in the case of Bitcoin, large speculators are effectively working as a group of “smart money,” because the market does not have the usual hedger presence seen in traditional commodity futures.
“Non-commercial traders of Bitcoin futures are generally smart money,” McClellan wrote. “This week’s COT report shows they are going long with some urgency. Look back at where two similar visits have led. But remember, this is ‘a condition, not a symptom’.”
Why Non-Trading Matters in Bitcoin Futures
McClellan later expanded on how he structured the CFTC’s weekly report, which divides futures positions into commercial, non-commercial, and non-reportable. In corn, for example, sales may be to producers or end users; in Bitcoin, he says that category is narrow. “In Bitcoin, there are no sellers who qualify as Commercial Traders,” McClellan wrote. “So in an unusual situation, non-commercial traders are taking on the role of being smart money.”
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That distinction is important because COT is not about long or short interest entirely, every futures contract has a long and short meaning, but it is about who is on each side. “Every futures contract has one long and one short, held by different parties. So the long price will always be equal to the short price,” he wrote. “The important thing is who holds the positions.”
McClellan also cautioned against importing equity market intuition about short interest in setting futures. He wrote: “COT data does not do that. It simply represents the opinion of experts.”
The core argument in the X series was not whether COT would be useful, but how to interpret time. Trader toni (@tonitrades_) agreed that the dataset has value but doubted that the futures position was simply following momentum. “COT data has always been a solid indicator, no argument there,” toni wrote. “But a non-trading stop often delays market movement by weeks. When futures traders pile up, the initial momentum tends to come at a price.”
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McClellan backed off in that sequence. “I think you meant that their pricing PRECEDES moves sometimes in weeks,” he replied, emphasizing his view that overpricing can be seen before reasonable market movements, although not in a predictable manner.
This is where the series settled: with an emphasis on uncertainty. Jim Osman (@EdgeCGroup) summed it up succinctly: “The timing is uncertain.” McClellan agreed. “Of course, so it’s my discipline.”
In his lengthy explanation, McClellan emphasized that in most cases the COT report does not have an actionable message, but that extremes can teach an important caveat. “There is often no useful message in the COT data for each futures contract,” he wrote.
“But if the extremes are growing right now in Bitcoin, then we can get useful information. But like any overbought or oversold reading in any indicator, COT data only shows a ‘condition’ and not a signal. The data will not tell you when that condition will be, only that it should be important, at some point.”
At press time, BTC traded at $65,663.
The featured image was created with DALL.E, a chart from TradingView.com
