Derivatives traders have become noticeably more conservative this month compared to the latest new data. Bitcoin (BTC) futures are starting to see record discounts as sentiment among derivatives traders worsens. In its latest special report, released Aug. 23, analytics firm Arcane Research painted an alarming picture of the morale of BTC futures participants.
CME Bitcoin futures see record cut
Bitcoin has bounced back to June lows on a futures basis. After the initial shock during the BTC price drop in June, which has since held a macro bottom, Bitcoin derivatives have not been the same. After the initial bounce, metrics are trending down and are breaking records this month.
The futures base (the difference between futures contract prices and Bitcoin spot price) has only returned to the lows seen during the June drop to $17,600. The move came thanks to the sudden sell-off in BTC/USD last week. This resulted in multiple visits for under $21,000. “Overall, current futures base sits at levels only briefly experienced during the June crash,” Arcane analysts say. Analysts add that the data “is indicative of a very bearish trend among futures traders.”
More discouraging numbers come from CME Group’s front month futures contract price. Contracts have surpassed their lowest levels before July 2021. They are now trading at the spot price at their biggest discount ever. The report continues:
Overall, CME’s futures have tended to trade at a discount over the past two months, but saw a short-term solid recovery during the market’s strength in early August.
Arcane analysts argue that “structural effects” in the derivatives market may find a way to explain behavior. But they say “worsening liquidity or overall risk reduction” is both still a risk:
While BTC derivatives may indicate a climate ripe for a short-term squeeze, the volatile trading range, conservative positioning and gradual accumulation in the spot market alongside the global market turmoil speaks for itself.
GBTC hovers close to record levels
US regulators rejected an application for a Bitcoin spot price exchange-traded fund (ETF) in June. After that, the largest institutional Bitcoin investment vehicle, meanwhile, continues to struggle. The Grayscale Bitcoin Trust (GBTC) is still trading at more than 30% discount to the Bitcoin spot price. cryptocoin.com The most recent data we have quoted as GBTC has determined the one-time premium GBTC discount as 32.5%. The discount also broke records in June, when it briefly exceeded 34%.
For investor and researcher Jeroen Blokland, the signs of a trend change remain unclear. According to the analyst:
I expect “physical” Bitcoin ETFs to be approved at some point. After the latest SEC decision, that doesn’t seem imminent, but futures ETFs (also) have their own threats
Blokland said that institutional investors “largely” prefer BTC risk options outside of GBTC.
