CME Exchange Sees Record Ether Shorts as Hedge Funds Ramp Up Basis Trading

Hedge funds are aggressively increasing short positions on ether (ETH) as the cryptocurrency approaches the $3,000 mark, utilizing basis trades to secure annualized yields close to 9.5%. According to CME data, institutional ETH shorts have reached $1.73 billion—the most extreme skew in derivatives history—while spot ETF inflows hit a single-day high of $421 million.

This strategy capitalizes on price differences between CME futures and spot ETFs, with traders shorting derivatives while purchasing physical ETH. Staking rewards provide an additional 3.5% yield for those holding actual tokens, though ETF investors cannot access this benefit due to custodial restrictions. This mirrors the Bitcoin basis trade surge in early 2024 before yield compression slowed BTC's momentum in March.