IntoTheBlock: Hedge Funds' Arbitrage Trading Positions May Have Caused BTC to Fall in Q1
Hedge funds' carry trade positions could push the market higher in the fourth quarter and could lead to a market decline in the first quarter of 2024, IntoTheBlock said on the X platform. Just one month prior to the ETF's approval, bitcoin futures were trading at a premium (positive spread) of more than 2% relative to the spot price; by going long spot and short futures, the fund would execute carry trades to profit from the price difference, which could be as much as 25% to 30% annualised; as the ETF approval window approached, the futures premium quickly shifted to a discount (led by BitMEX on 6 January), suggesting that the company began to take profits, causing prices to fall.
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