Key facts
- Hedge funds have shifted to a net long position in CME bitcoin futures.
- This is a rare move after years of structural shorts by hedge funds.
- The shift is driven by less attractive basis trades.
- Bitcoin's volatility index (BVIV) has fallen to 35.59%.
- This is the lowest level for the BVIV since September.
- Demand for options betting on large price swings has reduced.
- Downside protection through put options remains expensive.
- Put options are trading at a premium to call options.
Hedge funds trading on the Chicago Mercantile Exchange (CME) have adopted a net long position in bitcoin futures, marking a notable departure from their long-standing structural short positions. This strategic shift is attributed to less attractive basis trades, which typically involve exploiting price differences between spot and futures markets. The move suggests that professional traders are now anticipating and betting on bitcoin's potential price appreciation, especially as the cryptocurrency's price shows signs of recovery.