Basis trade returns to the crypto market. Why are positions on Ethereum growing faster than on Bitcoin?

Basis trades—a classic arbitrage strategy involving simultaneous purchases of spot assets and sales of more expensive futures contracts—have returned to the cryptocurrency market with measurable intensity, particularly in ether. The strategy profits from the convergence of spot and futures prices as contracts approach expiration. Sharp rallies in August and September triggered forced liquidations of short positions (a short squeeze), which temporarily inflated futures premiums relative to spot prices and created favorable conditions for basis traders to rebuild hedged positions.

The positioning data reveals a stark divergence between Ethereum and Bitcoin. According to CFTC commitment of traders reports, leveraged funds' short positions in ether futures more than doubled, rising from 6,128 contracts on August 4 to 13,220 contracts by September 22—a 115.7% increase. Over the identical period, Bitcoin shorts grew modestly from 11,483 to 12,698 contracts, representing only a 10.6% rise. This disproportionate expansion in ETH shorts suggests that traders are rebuilding basis trade positions more aggressively in Ethereum, likely pairing short futures with long spot purchases.

ETF flow data corroborates this interpretation. Spot ether ETFs collected approximately $2.73 billion in net inflows between August 3 and September 25, while Bitcoin spot ETFs attracted roughly $6.24 billion over the same window. While Bitcoin's absolute inflows exceed Ethereum's, the growth in ETH short positions is substantially larger, a pattern consistent with the mechanics of a cash-and-carry basis trade—where one side involves spot purchases and the corresponding hedge involves futures shorts. The combination of concentrated ETH short growth and more moderate Bitcoin short expansion suggests market participants perceive Ethereum's basis as a more attractive arbitrage opportunity at current price levels.