For years, the smart money on the Chicago Mercantile Exchange has been reliably short Bitcoin futures. That trade, a staple of the institutional playbook, just broke.
Ki Young Ju, founder and CEO of on-chain analytics firm CryptoQuant, announced on August 10 that leveraged hedge funds on the CME have flipped to a net long position in Bitcoin futures.
Why hedge funds were short in the first place
To understand why this matters, you need to understand the basis trade. It works like this: buy Bitcoin on the spot market, simultaneously short Bitcoin futures, and pocket the difference between the two prices. Because futures contracts typically trade at a premium to spot, this spread can generate steady, relatively low-risk returns.
The result of this strategy is that leveraged funds, as classified in CME’s Commitments of Traders reports, have consistently shown up as net short. Not because they were bearish on Bitcoin, but because being short futures was simply one leg of a market-neutral arbitrage.
