A rare CME shift: Hedge funds abandon structural shorts to bet on a bitcoin rally

Hedge funds trading bitcoin BTC$65,151.12 futures on the Chicago Mercantile Exchange have turned net long, according to Ki Young Ju, CEO of blockchain data analytics firm CryptoQuant.

The rare positioning shift suggests professional traders are increasingly betting on bitcoin prices rising.

“Hedge funds on CME have flipped net long on bitcoin futures, a rare shift after years of structural short positioning driven by the basis trade. You cannot run a traditional carry trade with an aggregate net-long futures position. The suits are now betting on bitcoin’s upside,” Ki Young Ju said.

Leveraged funds have historically remained net short CME Bitcoin futures because of the basis trade. In this market-neutral strategy, traders buy spot bitcoin or exchange-traded funds (ETFs) while simultaneously selling futures. Profit comes from the premium between futures and spot prices narrows, rather than from bitcoin moving higher. This activity has kept hedge funds’ reported futures positioning negative for years.