I was filled on a short bitUSD order and on a buy bitUSD order (trying to make a market in small size). I now see an asset as well as a short position in bitUSD. How do I get these two positions to offset each other?
Secondly, would it be better to hold this position since yield is around 5 on the asset but lower on my short?
So long as you have the same amount of bitUSD as you went short, they are offsetting each other already. You don't need to do anything else.
In order to close/cover your short order all you need is that amount of bitUSD, which you're saying you've already purchased. So hang on to the bitUSD, thats all you need.
You'll earn interest on your bitUSD balance. So long as its more than you are paying to maintain your short, it is profitable to do so.