CME Bitcoin futures record-breaking discount due to’very bearish’ sentiment

As sentiment among derivatives traders gets worse, Bitcoin ( BTC) futures begin to experience record-breaking discounts.

Arcane Research presented a disturbing picture in its August 23rd dedicated report.

Futures basis revisits June Lows

Bitcoin derivatives have been a different story since the initial shock that occurred during June’s BTC Price Drop. This macro bottom has held ever since.

After an initial bounce metrics have started to trend downwards and this month is challenging records.

Futures basis, which is the difference between the Bitcoin spot price and futures contract prices, has already returned to the lows it was at during June’s plunge to $17600. This was due to the sudden sell-off in BTC/USD last week, which led to multiple visits below $21,000.

Arcane stated that “Overall, current futures basis is at levels only briefly experienced during the June crash,” adding that this data “indicative of very bearish sentiments among futures traders.”

CME Group’s front month futures contract price is more troubling.

These contracts are now trading at a huge discount to spot prices, beating out previous lows of July 2021

The report stated that CME futures had tended to trade at a discount over the past two months, but experienced a short-lived recovery in early August due to market strength.

Screenshot: CME Bitcoin futures annualized 1 month rolling basis chart (screenshot). Source: Arcane Research

Arcane suggested that the “structural effects” of the derivatives market could explain the behavior but that both “worsening liquidity” and “general de-risking” still pose a risk.

It concluded that while BTC derivatives may signal a favorable climate for a quick squeeze, the choppy trade range along with global market turmoil speak in favor of conservative positioning.

GBTC lingers near record lows

The largest institutional Bitcoin investment vehicle is still struggling after the U.S. regulators in June rejected its application to create a Bitcoin spot-price exchange-traded fund.

Related: Aussie asset manager to offer crypto ETF using unique license variation

Grayscale Bitcoin Trust (GBTC), is still trading at a more than 30% discount to Bitcoin spot price.

The most recent data, which Cointelegraph previously reported the GBTC Discount — once a Premium — at 32.5%. In June, the discount briefly surpassed 34%.

Jeroen Blokland is an investor and researcher. However, signs of a change in trend are still elusive.

“I believe that the “physical” Bitcoin ETFs would be approved in due course. This doesn’t appear to be imminent after the recent SEC decision, but futures ETFs (also have their threats”), he stated this week.

Blokland stated that institutional investors are “massively” choosing BTC exposure options beyond GBTC.

GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass

These views and opinions are the author’s and do not necessarily reflect those of You should do your research before making any investment or trading decision.

Opinion writer on 7trade7