Key Takeaways
- • Leveraged funds held a net short position of 2,591 CME Bitcoin futures contracts (about 12,955 BTC) as of 3 November 2026, the smallest net short since February 2023 and roughly 89% below the December 2024 peak, according to TradingView and CFTC Traders in Financial Futures data cited by HedgeCo.
- • The annualised CME Bitcoin basis has narrowed to approximately 4.8%, offering little excess return over US Treasury yields after financing costs, margin requirements and crypto volatility.
- • Nine hedge funds, including Millennium Management and Brevan Howard, cut spot Bitcoin ETF exposure by about 68,000 BTC (around $5.4bn) between September 2025 and June 2026.
- • CME Bitcoin futures open interest fell to about 17,527 contracts (87,635 BTC) by early November, the low for the year.
- • Analysts note that ETF outflows during this period may reflect carry-trade unwinds rather than directional bearish sentiment, and a wider futures premium could restore the strategy's appeal.
Summary
Hedge funds have largely dismantled their Bitcoin basis trades, with leveraged funds reducing their net short position in CME Bitcoin futures by 89% since December 2024, according to a TradingView report. As of 3 November 2026, the net short stood at 2,591 contracts, equivalent to approximately 12,955 BTC, the smallest position since February 2023. The basis trade involves holding spot Bitcoin, often through an exchange-traded fund, while shorting futures at a premium and collecting the spread as contracts converge.
The unwind is driven by economics rather than sentiment. The annualised CME Bitcoin basis has fallen to approximately 4.8%, which, once financing costs, margin requirements and crypto volatility are factored in, offers little excess return over US Treasury yields. HedgeCo, citing CFTC Traders in Financial Futures data, reports the same figures and characterises the shift as a repricing of relative value rather than a directional view on the asset.
Multistrategy managers have also reduced spot ETF exposure. Millennium Management and Brevan Howard are among nine hedge funds that collectively cut holdings by roughly 68,000 BTC, worth around $5.4bn, between September 2025 and June 2026, according to reports citing regulatory filings. Trading activity has contracted in parallel, with CME Bitcoin futures open interest falling to about 17,527 contracts (87,635 BTC) by early November. In August, leveraged funds briefly moved to a net long futures position for the first time, a departure from their historically short-biased positioning.
The unwind complicates the interpretation of Bitcoin ETF flows. Redemptions tied to closing market-neutral spreads are not necessarily bearish bets on the asset, and some outflows this year likely reflected funds exiting the carry trade. Analysts cited by HedgeCo note the strategy is not permanently abandoned: basis capital is highly sensitive to the futures premium, and a renewed widening, such as during a sharp rally that lifts futures demand, could draw relative-value funds back quickly. For now, the data suggest hedge funds are favouring simpler sources of yield.
The unwind is driven by economics rather than sentiment. The annualised CME Bitcoin basis has fallen to approximately 4.8%, which, once financing costs, margin requirements and crypto volatility are factored in, offers little excess return over US Treasury yields. HedgeCo, citing CFTC Traders in Financial Futures data, reports the same figures and characterises the shift as a repricing of relative value rather than a directional view on the asset.
Multistrategy managers have also reduced spot ETF exposure. Millennium Management and Brevan Howard are among nine hedge funds that collectively cut holdings by roughly 68,000 BTC, worth around $5.4bn, between September 2025 and June 2026, according to reports citing regulatory filings. Trading activity has contracted in parallel, with CME Bitcoin futures open interest falling to about 17,527 contracts (87,635 BTC) by early November. In August, leveraged funds briefly moved to a net long futures position for the first time, a departure from their historically short-biased positioning.
The unwind complicates the interpretation of Bitcoin ETF flows. Redemptions tied to closing market-neutral spreads are not necessarily bearish bets on the asset, and some outflows this year likely reflected funds exiting the carry trade. Analysts cited by HedgeCo note the strategy is not permanently abandoned: basis capital is highly sensitive to the futures premium, and a renewed widening, such as during a sharp rally that lifts futures demand, could draw relative-value funds back quickly. For now, the data suggest hedge funds are favouring simpler sources of yield.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.