The premium on Bitcoin futures contracted at the Chicago Mercantile Exchange (CME) has sharply decreased, reflecting a decline in institutional demand. The annualized premium on rolling three-month futures has reached just 4.3%, marking the lowest point since October 2023, per data from 10x Research. This is a significant decline from the highs of over 10% earlier in the year.
BTC futures premium narrows.
Key Points:
- CME Bitcoin Premium: The premium for futures at CME has fallen to 4.3%, indicating a decrease in institutional interest.
- Market Impact: This drop in premium and negative funding rates suggest bearish sentiment and reduced hedge fund activities.
- Arbitrage Strategies: The narrowing price difference impacts cash-and-carry arbitrage, occurring alongside low retail engagement and speculative activity.
Analysts indicate the persistent decline in the so-called ‘basis,’ even as Bitcoin retains stability above $100,000, signals waning optimism regarding future prices. This shift corresponds with negative funding rates on leading offshore exchanges.
“When yield spreads fall below a 10% threshold, inflows into Bitcoin ETFs typically attract directional investors rather than arbitrage-seeking hedge funds. Currently, these spreads have reduced to 1.0% for perpetual futures funding rate and 4.3% for the CME basis rate, indicating a notable decrease in hedge fund arbitrage activities,” stated Markus Thielen, founder of 10x Research.
BTC 3M CME futures basis (premium) and perpetual funding rates. (10x Research)
For further information, visit 10x Research.
