Key Takeaways
- • Leveraged funds cut their net short in CME Bitcoin futures by 89% from the December 2024 peak, to 2,591 contracts (about 12,955 BTC) as of November 3, 2026, the smallest such position since February 2023.
- • The CME Bitcoin futures basis has compressed to 4.8% annualized, offering minimal excess return over US Treasury yields and making the basis trade largely uneconomic relative to risk-free alternatives.
- • Nine hedge funds, including Millennium Management and Brevan Howard, trimmed about 68,000 BTC of spot Bitcoin ETF exposure between September 2025 and June 2026, a position valued at roughly $5.4 billion.
- • CME Bitcoin futures open interest fell to about 17,527 contracts (roughly 87,635 BTC) by early November 2026, with trading volume also declining.
- • Leveraged funds briefly flipped to a net long on CME Bitcoin futures in August 2026 for the first time, an unusual move that has been read as a potential bullish signal.
Summary
Hedge funds have largely unwound the Bitcoin basis trade, one of the more popular institutional carry strategies of the ETF era. According to the primary report, leveraged funds' net short in CME Bitcoin futures fell 89% from its December 2024 peak. As of November 3, 2026, the net short stood at 2,591 contracts, or approximately 12,955 BTC, the smallest such position since February 2023.
The trade typically pairs a long spot exposure, often held through a spot Bitcoin ETF, with a short CME futures position that captures the premium between futures and spot as the contract converges at expiry. The report says that basis has narrowed to 4.8% annualized, which offers minimal excess return over US Treasury yields once the operational burden, margin requirements and crypto-specific risk are considered.
The unwind extends beyond futures. Multi-strategy managers including Millennium Management and Brevan Howard reportedly reduced spot Bitcoin ETF exposure sharply. Nine hedge funds trimmed about 68,000 BTC between September 2025 and June 2026, a stake valued at around $5.4 billion. CME activity has also thinned, with open interest at approximately 17,527 contracts (about 87,635 BTC) by early November 2026 and declining trading volume.
The report highlights that leveraged funds briefly moved to a net long CME position in August 2026, the first time this occurred, which it describes as a possible signal of bullish sentiment, though it stops short of confirming a trend. Analysts quoted in the coverage note that as basis-driven ETF buying fades, ETF flows may become a cleaner read on directional demand, while some outflows tied to the unwind may reflect dismantling of spread trades rather than bearish views. The basis level is identified as the key variable to watch, since a widening premium could revive the carry trade.
The trade typically pairs a long spot exposure, often held through a spot Bitcoin ETF, with a short CME futures position that captures the premium between futures and spot as the contract converges at expiry. The report says that basis has narrowed to 4.8% annualized, which offers minimal excess return over US Treasury yields once the operational burden, margin requirements and crypto-specific risk are considered.
The unwind extends beyond futures. Multi-strategy managers including Millennium Management and Brevan Howard reportedly reduced spot Bitcoin ETF exposure sharply. Nine hedge funds trimmed about 68,000 BTC between September 2025 and June 2026, a stake valued at around $5.4 billion. CME activity has also thinned, with open interest at approximately 17,527 contracts (about 87,635 BTC) by early November 2026 and declining trading volume.
The report highlights that leveraged funds briefly moved to a net long CME position in August 2026, the first time this occurred, which it describes as a possible signal of bullish sentiment, though it stops short of confirming a trend. Analysts quoted in the coverage note that as basis-driven ETF buying fades, ETF flows may become a cleaner read on directional demand, while some outflows tied to the unwind may reflect dismantling of spread trades rather than bearish views. The basis level is identified as the key variable to watch, since a widening premium could revive the carry trade.
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