Recent shifts in the futures market have prompted hedge funds to adopt long positions on Bitcoin, marking a notable departure from their previous short stance.
Significant Change in Trading Strategy for Hedge Funds
According to Ki Young Ju, the CEO of CryptoQuant, leveraged funds have transitioned to net long positions in Bitcoin futures at the Chicago Mercantile Exchange (CME). This alteration in strategy is significant, especially given that these funds maintained short positions for years.
Historically, hedge funds engaged in basis trading strategies, which involved buying physical Bitcoin or exchange-traded funds (ETFs) while simultaneously shorting futures contracts. This approach allowed them to take advantage of price discrepancies but has become less attractive recently. As Bitcoin's price climbed from around $58,000 to over $65,000, the annualized basis for three-month futures fell to approximately 3%, undercutting the yields available from two-year U.S. Treasury notes.
