Categories: Bitcoin

Bitcoin futures cash-and-carry trade tanks in profit; what’s next?

Bitcoin futures cash-and-carry trade tanks in profit; what’s next?

As the selling pressure on crypto continues, Bitcoin’s market price has plummeted. Consequently, the Bitcoin futures cash-and-carry trade has also tanked.

Investors prefer cash-and-carry trades in the derivatives market because they involve strategies for simultaneously purchasing and selling the asset. A few weeks ago, BTC futures traders locked in a risk-free annualized premium of 10% in such trades.

On a yearly basis, the difference between the BTC spot price and BTC futures was 10%. However, it is worth noting that traders require capital to secure BTC and margin with the futures contract.

Therefore, the returns are effectively reduced to 5%. Surprisingly, the annualized premium has dipped to 6% on paper and 3% on a technicality after considering the cost of holding the asset.

Bitcoin has dropped to $62,300, losing 3.31% in the past 24 hours. According to the latest BTC price forecast, traders are holding a neutral position regarding the crypto. Despite the recent dip, it can still hit the anticipated $100,000 level in 2024.

However, for that to happen, Bitcoin must cross the risk-free return zone on the cash-and-carry trade. Checkmate, a popular crypto analyst, noted that there is an “end of the juice left to squeeze” in BTC, after which the BTC futures trades will no longer be attractive.

Thus, it is quite possible that BTC traders will now aim for other cryptocurrencies, as BTC cash-and-carry trades will not justify the associated risks. 

Bitcoin has already recovered over 12% from June highs, and experts predict that it will eventually reach $60,000. Analysts also stated that the Bitcoin sell-side ratio is reaching levels that suggest an incoming major shift.

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The BTC market price is forming a falling edge within a shorter time frame, with a potential decline to $60,000.

Roxanne Williams: Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.