For a long time, Bitcoin futures premiums has been trending at the lowest levels. Although they occasionally broke out from the low trend in performance, they tend to return back into it. However, this does not mean that futures premiums will be in bad shape. It could indicate exhaustion. The reason for this is that premiums are trading at close to their yearly lows, indicating exhaustion is almost imminent.
Bitcoin Futures premiums down
Bitcoin futures premiums are down due to recent sell-offs. Investors who are exposed directly to bitcoin have seen a sell-off, as well as those who have access through traditional markets instruments like ETFs. Most notable of all these are the large outflows from ProShares’ BITO ETF. This is believed to be one major driver of the low basis.
Source: Arcane Research| Source: Arcane Research
On crypto exchanges FTX, Binance and Bitcoin, the three-month bitcoin basis is trending at 25 to 3%. It’s one of its lowest values ever. The last time the basis had touched this low had been in February when bitcoin’s price had been struggling. Following a quick squeeze, which resulted in a $6,000 gain for bitcoin’s value, it quickly recovered to $44,000.
Related Reading: Top Ethereum Whales now Hold $1.5 billion Worth of SHIB| Top Ethereum Whales Now Hold Almost $1.5 Billion Worth Of SHIB
However, the futures premium basis has seen more negative momentum. Now, it is trading at an even lower level than February and is trailing offshore counterparts with a premium 1.34%. This can be interpreted as an indicator of investors’ feelings about the digital asset. Bitcoin lost its grounding at $40,000 and sentiment turned bearish, which has led to muted futures premiums that are rarely seen at such low levels.
BTC trades north of $41,000| Source: BTCUSD on TradingView.com
There is a light at the end, however, given the track record of low futures premiums like this. They have been known historically to be brief-lived.
Could Netflix Tumble Down The Crypto Market?| Could Netflix Tumble Down The Crypto Market?
If that is true and bitcoin continues to follow historical trends, then a $6,000 more rally could push the cryptocurrency up to $47,000. If sell-off exhaustion occurs, then sentiment may quickly change to the positive and lead to a further surge in cryptocurrency’s price.
Featured image taken from MARCA. Chart from TradingView.com