Home
News
Two and a half years after a deep market decline and before the expiration of the August contract, Bitcoin Futures did trading at the largest discount to spot prices, at the Chicago Mercantile Exchange. Chicago exchange is one of the biggest derivatives markets in the world.
Arcane Research is aware of the average difference between the front-month Bitcoin futures of CME and BTC’s currency market price. Front-month futures at a 3.36% discount on Monday, August 22. It is a record low in the firm’s dataset dating back to January 1, 2020. However, the trading of CME Bitcoin Futures is active since December 2017. Arcane revealed that it has also beat the previous low of minus 2.39% fixated on July 21, 2021. The earlier low was followed by a hefty short squeeze.
In the past two months, the trading of CME futures was done at a discount, though it experienced a short-lived recovery at the month’s start when the momentum was low in the market. Bitcoin also touched the mark of $25,000 for a brief period in early August. But soon reached $21,000 on August 19.
Arcade Research analyst Vetle Lunde in a report stated that the increasing discounts in the first month could be partially explained through structural effects.
The report further mentions that the ProShares Bitcoin Strategy ETF (BITO) already started launching its August contracts into contracts whose expiration date is still far away. It eventually led to downward pressure on the front-month contracts. BITO released more than 1000 August contracts, as of Monday, August 19. It further intends to release more than 3,000 August contracts by August 26 i.e. Friday. According to Arcane, Front-month inclined towards discount at spots earlier when the exchange-traded fund launched over exposures.
Lunde said that such discounts don’t seem too extreme like the rolling periods. However, there could be an indication of worsening liquidity or general de-risking as S&P 500 and Nasdaq witness a crackling start while the dollar strength index climbs new highs.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
