Crypto Analytics: Hedge Funds Betting Against Bitcoin and Ethereum Futures on CME
New findings from market intelligence firm Kaiko Analytics reveal that hedge funds are taking a net short position on Bitcoin (BTC) and Ethereum (ETH) on the Chicago Mercantile Exchange (CME). However, this doesn’t necessarily indicate a bearish sentiment towards cryptocurrencies but rather reflects their engagement in basis trades, a form of arbitrage strategy.
- Understanding Net Short Position:
- Hedge funds have more short positions than long positions in the crypto derivatives markets.
Kaiko Analytics explains that hedge funds are likely employing a basis trade strategy, where they sell futures short while holding spot BTC or ETH to mitigate price volatility and ensure a specific sale price in case of market fluctuations.
- Reasons Behind Hedge Funds’ Short Position:
- The basis trade is beneficial when futures prices are higher than spot prices (contango).
- Hedge funds aim to profit from price convergence between spot and futures prices as expiration approaches.
Current Market Prices:
As of now, Bitcoin is trading at $69,251, while Ethereum’s value stands at $3,750.
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The post Hedge Funds Net Short on Bitcoin and Ethereum Futures on CME: Kaiko Analytics appeared first on The Daily Hodl.
Hot Take: Are Hedge Funds Predicting a Crypto Market Correction?
Despite hedge funds taking a net short position on Bitcoin and Ethereum futures on the CME, their actions may not reflect a pessimistic outlook on cryptocurrencies. By engaging in basis trades, these funds are strategically hedging against price fluctuations and aiming to capitalize on price differentials between spot and futures markets. It remains crucial for investors to closely monitor these developments and assess the potential impact on the broader crypto market.
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