Bitcoin Price Slide to $50K Derails Carry Traders’ Plans
Bitcoin Price– Bitcoin’s (BTC) recent price plunge has significantly reduced the gap between futures and spot prices, undermining the attractiveness of carry trades that rely on these market discrepancies for profit.
In just 24 hours, Bitcoin has plummeted by over 18%, falling to $50,000, its lowest level since February 2024. This sharp sell-off is part of a broader trend of risk aversion impacting global markets, likely driven by the Japanese yen’s sudden rise as a safe-haven currency and recent turbulence in the U.S. bond market.
According to Velo Data, the annualized three-month futures premium on Binance, a major cryptocurrency exchange, has dropped to 3.32%, marking its lowest point since April 2023. Similar declines are being observed on other crypto exchanges like OKX and Deribit, where futures premiums are also slipping.
Meanwhile, futures on the regulated Chicago Mercantile Exchange, which is favored by institutional investors, are now closely aligned with spot prices.
This alignment means that the classic cash-and-carry strategy—where an investor buys Bitcoin or U.S.-listed ETFs while simultaneously selling futures—no longer offers a significant return. The returns from this strategy are now comparable to or even less than the yield on the 10-year U.S. Treasury note.
This approach was quite popular among institutions in the first quarter of the year when futures were trading at a premium of over 20%. At that time, it was believed to have contributed significantly to the inflows into spot ETFs.
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