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Monday, June 10, 2024
HomeCryptoHedge Funds Short Bitcoin Record on CME

Hedge Funds Short Bitcoin Record on CME

Hedge funds are ramping up short positions in Bitcoin on the Chicago Mercantile Exchange (CME), even as spot Bitcoin exchange-traded funds (ETFs) enjoy a 19-day streak of inflows.

According to Zerohedge, the U.S. Commodity Futures Trading Commission (CFTC) Commitments of Traders (COT) report revealed a significant increase and new record high in net short positions by Bitcoin hedge funds .

Are Hedge Funds Bearish on Bitcoin?

Data shows that hedge funds have increased their short positions in CME benchmark Bitcoin futures contracts. These positions reached a record high of 18,175 contracts. These contracts, sized at 5 BTC each, are part of a trading strategy in which traders sell futures contracts to profit from predicted drops in asset prices.

Hedge Funds’ Bitcoin Short Positions | Source: X/Zerohedge

Sina G, co-founder of BTC-focused 21st Capital, suggested that these record short positions may indicate hedge funds’ interest in carry trade strategies. Traders following this strategy often short futures contracts while simultaneously buying assets, aiming to exploit the price difference between the spot market and the futures market.

“These are more speculative positions and may indicate a carry trade, where hedge funds are Long Bitcoin elsewhere. But asset managers hold the opposite view. These positions are less speculative and more long-term,” Sina G comment.

Interestingly, the record short positions coincided with a 19-day streak of inflows into the Bitcoin ETF. Over the past three weeks, ETFs have seen inflows of more than $2 billion. However, despite this significant capital inflow, Bitcoin price failed to reach its March all-time high of $73,835. Instead, it recorded a modest gain of just 1.6% over the past 7 days.

bitcoin

Flow via Bitcoin ETF | Source: SoSo Value

BTC’s weak price performance has left many investors confused. However, market experts explain that this trend is due to large financial institutions buying Bitcoin ETFs and simultaneously selling futures contracts to take advantage of price differences. This resulted in significant ETF inflows with minimal impact on Bitcoin’s spot price.

However, Samson Mow, CEO of JAN3, convinced that “all Bitcoin shorts will eventually close, like it or not.”

You can see the Bitcoin price price here.

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According to Beincrypto

Mark Tyson
Mark Tyson
Freelance News Writer. Always interested in the way in which technology can change people's lives, and that is why I also advise individuals and companies when it comes to adopting all the advances in Apple devices and services.
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