Hedge funds trimmed their net bearish Bitcoin futures positions substantially during a period of cryptocurrency weakness, according to Commodity Futures Trading Commission data. Leveraged funds held a net short position equivalent to 30,611 BTC as of October 13, down 5,292 BTC from 35,903 BTC a week earlier—a reduction of nearly 15%.
The pullback came as Bitcoin declined from approximately $85,600 on October 6 to $83,100 on October 13, with the cryptocurrency briefly slipping below $81,000 during the reporting period.
Market Pressures on Risk Assets
Rising Treasury yields approaching 5.3% and expectations of additional Federal Reserve tightening weighed on speculative assets throughout the week. Elevated oil prices reinforced persistent inflation concerns, while higher bond yields increased the relative appeal of interest-bearing investments. These factors contributed to Bitcoin's weakness and reduced confidence in the cryptocurrency's late-September recovery, particularly as demand through US-listed exchange-traded funds deteriorated.
On October 13, volatility intensified as a sharp selloff in South Korean semiconductor stocks spread through Asian equities. South Korea's KOSPI index fell approximately 5.5%, with Samsung Electronics and SK Hynix suffering heavy losses amid concerns about artificial intelligence investment financing and profitability. The selloff coincided with approximately $813 million in cryptocurrency liquidations over 24 hours, including $686.72 million in bullish positions.
Positioning Shifts
CFTC figures showed outright short positions declined by 6,437 BTC to 59,458 BTC, while outright long positions fell by a smaller 1,145 BTC to 28,847 BTC. The faster decline in shorts narrowed the bearish imbalance, though leveraged funds maintained more than twice as much outright short exposure as long exposure.
Repeated price reversals and mounting market pressure gave leveraged funds economic incentive to reduce exposure. The resulting price swings made large directional positions increasingly risky for traders.
Spread Positions Rise
While leveraged funds reduced outright bearish exposure, they increased offsetting long and short Bitcoin futures positions. Spreading positions rose by 2,719 BTC-equivalent per leg to approximately 8,434 BTC—up nearly 48% during the reporting week. These strategies allow traders to seek returns from differences in futures pricing while limiting directional market exposure.
Combined open interest across standard and micro Bitcoin futures contracts declined by approximately 3,567 BTC-equivalent, or 3.2%, during the week, reflecting a broader contraction in CME Bitcoin futures participation.
Subsequent Price Action
After the October 13 CFTC snapshot, additional inflationary data reignited selling pressure. On October 14, hotter-than-expected US consumer inflation revived expectations of another Federal Reserve rate increase, sending Bitcoin below $83,000. The following day, a sharp increase in wholesale inflation pushed the cryptocurrency to approximately $79,730 and triggered $939 million in cryptocurrency liquidations. Bitcoin later recovered to about $82,800 on October 19, though the market remained vulnerable to further selling.
The next CFTC report, scheduled for October 23 and covering positions as of October 20, will provide the first indication of whether leveraged funds continued reducing bearish exposure or rebuilt short positions during the renewed selloff.
