Bitcoin gained 4% and the global cryptocurrency market cap rose 3% to $2.7 trillion.
Hedge funds are betting heavily against Bitcoin in futures markets, potentially looking to take advantage of increased funding rates as the most valuable cryptocurrency continues to trade sideways.
According to data from Zerohedge, funds have taken record short positions in Bitcoin futures. Since each CME Bitcoin futures contract represents 5 BTC, these institutions have reportedly shorted more than 80,000 BTC, a notional value of $5.4 billion at today's prices.
Hedge fund short positions
A possible explanation for the extreme positioning is underlying trades that want to profit from the difference between spot and futures prices. By purchasing spot Bitcoin and opening a short futures position of the same size, traders can take advantage of the difference as prices converge at expiration. June futures are currently trading at a 3% premium.
Bitcoin futures prices
Increased interest rates on perpetual funding sweeten the deal as traders get paid to hold their short positions – a source of yield leveraged by Ethena's controversial new “synthetic dollar.”
The markets are recovering
Crypto markets have clawed back some of the week's losses, with Bitcoin gaining 3% in the last 24 hours to trade at around $68,000. Ether was up 1% at $3,375.
Among the top 100 digital assets by market cap, Ethereum Layer 2 network Mantle and veteran DeFi lender MakerDAO lead the way with gains of 12% and 7%, respectively. MKR is trading above $4,000 for the first time since May 2021, pushing its value to nearly $4 billion.
MKR Prize
Cross-chain interoperability protocol Wormhole's W token, launched yesterday, is down 23% today, likely due to selling pressure from airdrop recipients.
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