The price of bitcoin is hovering around $67,500 despite spot bitcoin exchange-traded funds (ETFs) recording over two weeks of positive inflows. While that 19-day inflow streak ended on June 10, a growing bitcoin short position could have something to do with the lack of upward momentum for the leading digital asset. 

“Despite impressive US ETF inflows, a market-neutral Cash-and-Carry trade appears to be subduing buy-side pressure, requiring non-arbitrage demand to further stimulate price action,” wrote analysts at Glassnode in the firm’s latest weekly summary of the crypto market. 

A cash-and-carry trade is an arbitrage strategy where traders take advantage of the mispricing between an underlying asset and its prince in the derivatives market. Essentially, traders simultaneously take a long position in an asset and a short position in the derivative.

In this instance, analysts at Glassnode observed that traders have turned to spot bitcoin ETFs as their instrument of choice for long exposure, but have also started accruing short positions in the CME Group futures market for bitcoin.

“We can see that entities categorized as hedge funds are building up an increasingly large net short position for bitcoin,” said Glassnode analysts.

“At present, Hedge Funds are net short in both CME Bitcoin and Micro CME Bitcoin markets by $6.33B [billion] and $97M [million], respectively.”

In their view, the magnitude of these cash-and-carry trades between long US spot ETF products and shorting futures via the CME Group exchange has dampened the effect of buy-side inflows into ETFs and translated into a neutral impact on market prices. 

Over the last 24 hours, there were $46 million worth of bitcoin liquidations, with around 30%  of those being short positions, according to data from CoinGlass. In total, the crypto market saw $189 million in liquidations over the period.