Hedge Funds Turn Net Long on Bitcoin Futures in Rare Shift

Leveraged funds trading bitcoin futures on the Chicago Mercantile Exchange have flipped to a net long position, according to CryptoQuant CEO Ki Young Ju, marking an unusual break from years of structurally short positioning. The shift suggests professional traders are increasingly leaning toward expectations of rising bitcoin prices rather than running their traditional market-neutral strategies.

The Fading Appeal of the Basis Trade

For years, hedge funds have used the basis trade, buying spot bitcoin or related funds while simultaneously selling futures to profit from the narrowing gap between the two prices rather than from bitcoin’s price direction. That strategy has kept futures positioning negative for extended periods. However, the annualized three-month futures basis has dropped to around 3%, now falling below the roughly 3.8% yield offered by two-year Treasury notes, reducing the incentive to maintain the trade given its added funding and execution risks.

A Possible Signal of Institutional Confidence

Bitcoin has climbed above $65,000 after bottoming near $58,000 in early July. The move from net-short to net-long futures positioning may partly reflect funds unwinding basis trades, but it also indicates that bullish bets among these funds now outweigh bearish ones, a shift some see as a meaningful institutional signal supporting the broader recovery.