Amid the election-driven price volatility, certain hedge funds have leveraged the price gap between spot Bitcoin and its futures contracts to execute profitable trades.
According to a Reuters report, some global hedge funds, including Millennium Management, Capula Management and Tudor Investment, have increased their exposure to U.S. spot bitcoin exchange-traded funds (ETFs) in the third quarter of 2024.
Israel Englander’s Millennium Management more than doubled its holdings in the iShares Bitcoin Trust since last quarter – to 23.5 million shares worth $849 million. The fund also boosted its investments in the ARK 21Shares Bitcoin and Bitwise Bitcoin funds. Thus, by the end of September, it had about $1.7 billion in crypto ETFs, including both spot bitcoin and ethereum funds.
London-based macro hedge fund Capula also added more iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund shares, holding roughly $600 million in total.
Tudor Investment Corporation, which typically invests based on macroeconomic trends, increased its number of shares in the iShares Bitcoin Trust fund by five times to 4.4 million.
Having aggregate assets under management (AUM) volumes over $90 billion, these three funds are not the only institutions of similar kind to have capitalised on the price discrepancy between spot Bitcoin and its futures derivatives during the short-term market fluctuations caused by the uncertainty of the U.S. election outcome.
Immediately after the election, Bitcoin reached an all-time high at the time – $75K. Today, this milestone is not that impressive anymore, as the pioneer cryptocurrency has shortly surpassed the $92K threshold this week before moderating its stellar growth a little. At the point of writing, the BTC price hovers around $90K.
Analysts noted patterns of leveraged trade during the election period. In the “Bitcoin basis trade,” investors buy Bitcoin or its ETFs and short futures, which have been much pricier this year. After the election, the price gap hit 17% annually on Nov. 11 but dropped to 12% by Friday.
The 13-F filings released this week reveal only the long equity positions held by hedge funds, excluding bets on declining share prices or derivatives.
