Kaiko: Hedge funds hold net short positions in Bitcoin and Ethereum futures, maintaining a cautious stance in volatile markets

A recent analysis by Kaiko found that hedge funds currently hold a net short position in Bitcoin and Ethereum futures. This strategic move reflects a cautious stance amid volatile market dynamics and speculative trading activity. The report notes that the net short position represents a broader sentiment among hedge funds, which may be driven by various hedging strategies rather than an outright pessimism about the future value of cryptocurrencies. Its research highlights this trend as derivatives markets, especially perpetual futures contracts, remain an important arena for high-risk speculation and price discovery in the crypto industry. Kaiko researcher Adam Morgan McCarthy noted that both Bitcoin and Ethereum perpetual futures contracts show volatile funding rates and open interest data, indicating that the market is ready for large price fluctuations. McCarthy's research explained: "High funding rates above 0.07% are usually a sign of overheated markets. As prices rise rapidly, traders are willing to pay higher prices to maintain long positions." (Bitcoin.com)