Hedge Funds Hold Net Short Positions in Bitcoin and Ethereum Futures, Analysis Reveals

According to Odaily, a recent analysis by Kaiko has revealed that hedge funds currently hold net short positions in Bitcoin and Ethereum futures. This strategic move reflects a cautious stance amidst volatile market dynamics and speculative trading activities. The report suggests that the net short status represents a broader sentiment within hedge funds, which could be driven by various hedging strategies rather than a complete pessimism about the future value of cryptocurrencies. The study emphasizes this trend as the derivatives market, particularly perpetual futures contracts, remains a crucial stage for high-risk speculation and price discovery in the crypto industry. Kaiko researcher Adam Morgan McCarthy noted that the perpetual futures contracts of Bitcoin and Ethereum both show volatile funding rates and open interest data, indicating that the market is prepared for significant price fluctuations. McCarthy's research explains that a high funding rate above 0.07% is usually a signal of an overheated market. As prices rise rapidly, traders are willing to pay a higher price to maintain long positions.