Crypto Markets Bounce As Hedge Funds Pile On Bitcoin Shorts – The Defiant

Bitcoin rallied 4%, with the global crypto market capitalization up 3% to $2.7 trillion.

Hedge funds are betting big against Bitcoin in the futures markets, possibly seeking to benefit from elevated funding rates, as the most valuable cryptocurrency continues to trade sideways.

Funds have built up record short positions in Bitcoin futures, according to data shared by zerohedge. As each CME Bitcoin futures contract represents 5 BTC, these institutions are reported to be short more than 80,000 BTC, with a theoretical value of $5.4 billion at current prices.

Hedge Fund Short Positions

One possible explanation for the extreme positioning is basis trading, which seeks to profit from the difference between spot and futures prices. By purchasing Bitcoin spot and opening a short futures position of the same size, traders can capture the spread when prices converge at expiration. June futures are currently trading at a 3% premium.