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Latest data of Bitcoin futures show that speculative activities weakened after the price of the iconic cryptocurrency dropped, according to a report from U.S. Commodity Futures Trading Commission (CFTC) on Friday, Trend reports citing Xinhua.
For the week ending July 23, non-commercial investors, commonly treated as market speculators, held a net short position of 1,222 Bitcoin future contracts.
The Bitcoin futures, traded at Chicago Mercantile Exchange in the United States, are derivative financial contracts that obligate the parties to transact an underlying asset at a predetermined future date and price. The underlying asset of each Bitcoin future contract includes five Bitcoins.
Meanwhile, commercial traders, commonly treated as hedgers, also held a net short position of 26 contracts.
Speculators and hedgers are different types of investors. Speculators try to make a profit from the assets' price volatility, whereas hedgers attempt to reduce or "hedge" the amount of risk created by price volatility during the holding period of the assets.
When investors "short" some kind of financial assets like currencies, commodities, options or futures, they hold a bearish view on the asset and believe there will be a drop in the price.
The CFTC is an independent agency of the U.S. government. Established in 1974, it regulates futures and option markets, and posts weekly reports on the position of future contract holders to help the public understand market dynamics.