Since FTX’s Collapse, Bitcoin CME Futures Have Attracted Premium For The First Time

The market panic that followed Sam Bankman Fried’s FTX exchange collapsing in early November appears to be subsiding.
Since FTXs Collapse Bitcoin CME Futures Have Attracted Premium For The First Time
Since FTX's Collapse, Bitcoin CME Futures Have Attracted Premium For The First Time 3

For the first time since FTX collapsed, the three-month Bitcoin (BTC) futures on the Chicago Mercantile Exchange (CME), commonly seen as a proxy for institutional involvement, are fetching a premium over the cryptocurrency’s current spot market price.

The increased premium shows that institutional activity has shifted away from mainly being on the short side. Mid-November saw a record discount in CME futures as knowledgeable traders placed negative bets to protect themselves from a further FTX-caused decline in the top cryptocurrency.

Bitcoin, however, has been more resilient than expected over the past two months, with the downside capped at around $16,000.

The annualized premium for the three-month CME futures was 0.2%, while the annualized premium for the equivalent Binance futures was 2.4%.

CME futures term structure

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According to Arcane Research, the CME futures term structure, which is the distinction between futures of various maturities at a given time point, is still inverted or in backwardation.

In other words, even though prices are often higher towards the long end of the curve, farther-month contracts continue to trade at lower prices than near-month futures.

“While CME’s basis has recovered, the term structure remains in backwardation as institutional investors maintain a cautious view on bitcoin and less liquid further dated expiry dates,” Arcane Research’s Bendik Schei and Vetle Lunde wrote in a note to clients.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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