Bitcoin rose 4%, and the global cryptocurrency market capitalization rose 3% to $2.7 trillion.
As the most valuable cryptocurrency continues to trade sideways, hedge funds are betting big against Bitcoin in the futures market and may be looking to profit from higher funding rates.
Funds have amassed record short positions in Bitcoin futures, according to data Shared by Zerohedge. Since each CME Bitcoin futures contract is worth 5 BTC, these institutions are reportedly shorting over 80,000 BTC, which is nominally worth $5.4 billion at today's prices.
One possible explanation for extreme positioning is basis trading, which seeks to profit from the difference between spot and futures prices. Traders can buy spot Bitcoin and open a short futures position of the same size, capturing the difference when prices converge at expiration. June futures are currently trading at a 3% premium.
Traders are rewarded for holding short positions, so higher perpetual funding rates make trading more profitable. This short position is the yield source leveraged by Ethena's controversial new “synthetic dollar.”
market recovers
Cryptocurrency markets have recouped some of this week's losses, with Bitcoin up 3% in the past 24 hours to trade at around $68,000. Ether rose 1% to $3,375.
Among the top 100 digital assets by market capitalization, Ethereum layer 2 network Mantle and veteran DeFi financier MakerDAO were the best performers today, posting gains of 12% and 7%, respectively. MKR is trading above $4,000 for the first time since May 2021, increasing its valuation to nearly $4 billion.
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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