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$BTC
• The bitcoin BTC $106,769.17 premium on the global derivatives behemoth Chicago Mercantile Exchange (CME)-listed futures has narrowed tightly, a reflection of diminished institutional demand.
• The three-month rolling annualized premium has fallen to 4.3%, the lowest since October 2023, based on data monitored by 10x Research. That's well off highs above 10% hit earlier in the year.
• The drop in so-called basis, even as BTC's price remained constant above $100,000, shows waning optimism or doubts regarding potential price prospects.
• The decline is in line with the fall in the funding rates on perpetual futures quoted on leading offshore exchanges. As 10x points out, funding rates recently turned negative, an indication of a discount in perpetual futures against the spot price and a further indicator of bearish short position bias.
• The shrinking price gap is a hurdle for would-be pursuers of the non-directional cash-and-carry arbitrage, wherein one buys spot ETFs (or in effect, BTC) and sells short the CME futures simultaneously.
• "When spreads on yield fall below a hurdle rate of 10%, Bitcoin ETF inflows are more likely to come from directional investors than arbitrage-hedged funds. This is often accompanied by price consolidation. Such spreads now stand at 1.0% (perpetual futures funding rate) and 4.3% (CME basis rate), pointing to a steep drop in hedge fund arbitrage," Markus Thielen, founder of 10x Research, explained to CoinDesk.
• Thielen further stated the drop-off aligns with subdued retail participation, as evidenced by suppressed perpetual funding rates and low spot market volumes.
• Padalan Capital also expressed the same view in a weekly note, referring to the reduction in funding rates as an indication of retrenchment in speculative interest.
• "A more intense risk-off signal is provided by regulated platforms, where the CME-to-spot basis for both Ethereum and Bitcoin has inverted into deeply negative territory, reflecting aggressive institutional hedging or a massive unwind of cash-and-carry arrangements," Padalan Capital explained.
• The bitcoin BTC $106,769.17 premium on the global derivatives behemoth Chicago Mercantile Exchange (CME)-listed futures has narrowed tightly, a reflection of diminished institutional demand.
• The three-month rolling annualized premium has fallen to 4.3%, the lowest since October 2023, based on data monitored by 10x Research. That's well off highs above 10% hit earlier in the year.
• The drop in so-called basis, even as BTC's price remained constant above $100,000, shows waning optimism or doubts regarding potential price prospects.
• The decline is in line with the fall in the funding rates on perpetual futures quoted on leading offshore exchanges. As 10x points out, funding rates recently turned negative, an indication of a discount in perpetual futures against the spot price and a further indicator of bearish short position bias.
• The shrinking price gap is a hurdle for would-be pursuers of the non-directional cash-and-carry arbitrage, wherein one buys spot ETFs (or in effect, BTC) and sells short the CME futures simultaneously.
• "When spreads on yield fall below a hurdle rate of 10%, Bitcoin ETF inflows are more likely to come from directional investors than arbitrage-hedged funds. This is often accompanied by price consolidation. Such spreads now stand at 1.0% (perpetual futures funding rate) and 4.3% (CME basis rate), pointing to a steep drop in hedge fund arbitrage," Markus Thielen, founder of 10x Research, explained to CoinDesk.
• Thielen further stated the drop-off aligns with subdued retail participation, as evidenced by suppressed perpetual funding rates and low spot market volumes.
• Padalan Capital also expressed the same view in a weekly note, referring to the reduction in funding rates as an indication of retrenchment in speculative interest.
• "A more intense risk-off signal is provided by regulated platforms, where the CME-to-spot basis for both Ethereum and Bitcoin has inverted into deeply negative territory, reflecting aggressive institutional hedging or a massive unwind of cash-and-carry arrangements," Padalan Capital explained.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
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