How Do Traders of Bitcoin Futures React to Shocks from Bitcoin ETF and Hacking Incidents?

Abstract

We investigate the trading positions of different types of traders in bitcoin futures. Our results show that the introduction of bitcoin futures-based ETF (BITO) and hacking incidents are important factors for trading activities in bitcoin futures. Specifically, asset managers’ long positions reflect the fund inflow of BITO and the trading demand of BITO holders. The introduction of BITO and the occurrence of hacking incidents trigger leveraged funds to take more short positions. We also find that BITO introduction increases dealers’ short positions in bitcoin futures. This study provides new insights into trader behaviors in bitcoin futures, so our results should be of interest to bitcoin traders, policymakers, and researchers.

Keywords: Bitcoin futures, Exchange-traded fund (ETF), Hacking incidents, Traders in Financial Futures (TFF)