Hedge funds are amassing substantial net short positions in Bitcoin, according to recent analysis by Glassnode. This development comes as Bitcoin’s price remains around $67,500, despite over two weeks of positive inflows into spot Bitcoin exchange-traded funds (ETFs). Although this 19-day inflow streak ended on June 10, the expanding short positions may be curbing the upward momentum of the leading digital asset.
Glassnode analysts highlighted in their latest weekly crypto market summary that, “Despite impressive US ETF inflows, a market-neutral Cash-and-Carry trade appears to be subduing buy-side pressure, requiring non-arbitrage demand to further stimulate price action.”
A cash-and-carry trade is an arbitrage strategy that exploits the price discrepancy between an underlying asset and its derivatives market. Traders engage in this strategy by taking a long position in the asset and a short position in its derivative.
In this case, Glassnode observed that traders have been using spot Bitcoin ETFs for long exposure while simultaneously accumulating short positions in the CME Group futures market for Bitcoin.
“We can see that entities categorized as hedge funds are building up an increasingly large net short position for Bitcoin,” Glassnode reported.
Currently, hedge funds hold net short positions in both the CME Bitcoin and Micro CME Bitcoin markets, amounting to $6.33 billion and $97 million, respectively.
According to Glassnode, the scale of these cash-and-carry trades, involving long positions in US spot ETF products and short positions in futures via the CME Group exchange, has muted the impact of ETF buy-side inflows on market prices, resulting in a neutral effect on Bitcoin’s market value.
In the past 24 hours, Bitcoin liquidations totaled $5 million, predominantly from short positions, based on data from CoinGlass. The overall crypto market experienced $250 million in liquidations during this period.
Related topics:
Schonfeld Strategic Management Disciplined By CME Group
CME Advocates For Asean Currency System
Eu Repo Volumes Up 1% Month-on-month In May, Cme Brokertec Reports