Hedge Funds Accelerate Ether Short Positions on CME Exchange as Basis Trading Hits Record Highs

Institutional traders are increasingly engaging in ether basis trades, with hedge funds amassing $1.73 billion in ETH short positions on CME. This strategy involves shorting ETH futures while simultaneously purchasing spot ETFs, creating a delta-neutral position that currently offers an annual yield of around 9.5%.

The surge in basis trading aligns with unprecedented inflows into ether ETFs, including a single-day record of $421 million last week. Traders could potentially enhance returns by an additional 3.5% through staking—a benefit unavailable to ETF investors due to custody limitations.

This institutional activity echoes the Bitcoin basis trade trend that peaked in early 2024 before declining yields temporarily slowed BTC inflows. The ether market is now attracting capital that previously flowed into bitcoin-based strategies.