Hedge Funds Do BTC, Prices Flat Despite High ETH Inflows.

Futures Selling Pressure Offsets Potential Price Gains Driven by ETFs.

Despite the massive inflows into Bitcoin ETFs over the past 19 days, Bitcoin’s spot price has remained stable as large hedge funds simultaneously buy ETFs and sell futures contracts, offsetting the potential impact of inflows on spot prices.

Crypto investment firm CMS Holdings recently tweeted about the phenomenon, saying:

Hedge funds’ net short position in CME’s standard Bitcoin futures contracts has increased to a record 18,175 contracts, according to the Commodity Futures Trading Commission’s Commitment of Traders report.

The surge in short positions may be related to basis trading, where hedge funds buy Bitcoin through ETFs that closely track spot prices while simultaneously selling futures contracts.

This strategy makes it possible for hedge funds to profit from the narrowing gap between futures and spot prices, especially as futures contracts approach expiration.

The research arm of crypto derivatives exchange BitMEX said that prime brokers are willing to accept Bitcoin ETFs as collateral, which could facilitate larger basis trading.

Despite the massive inflows into Bitcoin ETFs, selling pressure in the futures market offset any potential upside from ETF buying.

Fluctuations in futures open interest (OI) indicate mixed sentiment as traders may be hedging or speculating on short-term price moves.