Analysts Reveal Bitcoin Whales' $7.5 Billion Transaction

Analysts explained the reason for the positions opened in Bitcoin futures contracts.

A short position was opened with approximately 18 thousand Bitcoin futures contracts on the CME exchange, which is used by institutional investors.

It doubled the record levels in 2021

“How popular base trading is can be seen from how much interest hedge funds have shown in shorting Bitcoin futures contracts on the CME,” said Ravi Doshi, market manager at broker FalconX.

“There is currently more than $7.5 billion in short futures contracts,” Doshi said. "In 2021, when Bitcoin's base was much higher than today, short positions broke a record with only $ 2 billion," he said.

In the base trading strategy, it is aimed to make a profit from the price difference between spot and futures markets. This strategy gained popularity after spot Bitcoin ETFs entered the market.

In this way, hedge funds can sell Bitcoin contracts at higher prices while buying spot Bitcoin ETFs.

Did it suppress demand in ETFs?

As short positions in futures markets proliferate, the amount of money entering spot Bitcoin ETFs also increases. ETFs had a net inflow of money for 19 consecutive days until the beginning of this week. The total value of Bitcoins held in them exceeded $61 billion.

Some analysts attribute the failure of the Bitcoin price to rise despite the demand for ETFs to short positions in derivative markets.

He disputed these allegations

According to K33 Research analyst Vetle Lunde, the idea that money flowing into ETFs is due to basis trades is not true.

“The popular interpretation that money flow in ETFs is suppressed by shorts on the CME is incorrect,” Lunde said.