The market panic that ensued after the collapse of Sam Bankman-Fried's FTX exchange in early November seems to be abating.
The three-month bitcoin (BTC) futures listed on the Chicago Mercantile Exchange (CME), widely considered a proxy for institutional activity, are drawing a premium over the the cryptocurrency's going spot market price for the first time since FTX went bust.
The renewed premium indicates that institutional activity is no longer concentrated on the short side. The CME futures fell into a record discount in mid-November as sophisticated traders took bearish bets to hedge against a deeper FTX-induced slide in the leading cryptocurrency.
Bitcoin, however, has been more resilient than expected over the past two months, with the downside capped at around $16,000.
The three-month CME futures traded at an annualized premium of 0.2%, while their Binance counterparts drew a premium of 2.4%.
The CME futures term structure – the difference between futures of different maturities at a given time point – remains inverted or in backwardation, according to Arcane Research.
In other words, farther-month contracts continue to trade at prices lower than near-month contracts, an anomalous condition, considering prices are generally higher at the long end of the curve.
"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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.