i had a massive crush on my friend - a cute italian cubbish guy. we were best friends, hung out a lot, we worked together, sometimes gymmed together too. he was totally straight though, and it didn't help that he would get affectionate with me (like nuzzly, hand-holdy) when he had a drink or two in him (fuckin italians!).
of course everyone thought we were could've been messing around. but they were wrong it was strictly platonic, even though we did see each other naked at the gym or while crashing at one anothers house after a night out, etc.
after months of semi-secretly crushing on him, i dealt with it by being totally upfront about it (after a few drinks while having dinner together). i told him i really liked him and thought maybe there was a chance between us. he was polite and said he was totally straight but loved our friendship. and then it just became neutralised - my attraction shifted from lust to bromance, and the whole thing became a running joke between us.
i'd say, "why can't you be gay?" he'd say, "why can't you be a girl?" i'd reply, "it would be easier for you to be gay than for me to be a girl!" or "i'll wrestle you - loser bottoms." or he'd stay over and i'd say "hey no monkey business, i'm not that kind of guy!" he'd be my wing man looking for hot guys, i'd be his wing man introducing him to pretty girls. it deepened our friendship.
anyways, sometimes we create things in our own heads and they seem pretty real. but getting them out into the open provides a new perspective on things which causes you to see things differently. can you talk to your buddy about this?