HedgeCo.Net — Hedge funds have largely dismantled the bitcoin cash-and-carry trade. Leveraged funds held a net short position of 2,591 CME bitcoin futures contracts, or roughly 12,955 BTC, as of November 3, according to the CFTC’s Traders in Financial Futures data. That is the smallest net short since February 2023 and about 89% below the peak reached in December 2024.
The driver is economics rather than sentiment. The annualized CME bitcoin basis has narrowed to about 4.8%, offering little excess return over U.S. Treasury yields once financing costs, margin requirements and crypto volatility are taken into account. The trade involves holding spot bitcoin, often through an ETF, while shorting futures at a premium and collecting the spread as the contracts converge.
The unwind shows up across the market. CME bitcoin futures open interest fell to about 17,527 contracts by early November, the low for the year. Multistrategy managers including Millennium Management and Brevan Howard also cut spot bitcoin ETF exposure, with nine hedge funds reducing holdings by about 68,000 BTC, worth around $5.4 billion, between September 2025 and June 2026, according to reports citing regulatory filings. In August, leveraged funds briefly flipped to a net long position on CME for the first time.
The shift complicates the reading of spot ETF flows. Redemptions tied to closing a market-neutral spread are not a directional bet against bitcoin, and some of this year’s outflows likely reflected funds exiting the carry trade rather than turning bearish.
The trade is not gone for good. Basis capital is highly sensitive to the futures premium, and a renewed widening, for example during a sharp rally that lifts futures demand, could bring relative-value funds back quickly. For now, the data suggest hedge funds are favoring simpler sources of yield.