04 Oct 2021
Institutional traders bullish on “Uptober”?
The annualized basis on the front-month contract climbed sharply on CME early this week, reaching levels not seen since April 15th, suggesting that institutional investors are turning bullish going into the last quarter.
The front-month contract on CME is by far the most frequently traded BTC futures contract on the exchange, and right now, bullish tendencies seem to be brewing on the institutional platform. The basis premium of the front-month contract has fluctuated between 8 and 10% since Sunday. This is in stark contrast to the basis we’ve seen since May of between 2-5%. This suggests that there is high demand among the CME traders to build long exposure in bitcoin at the moment. Last week, we mentioned how we’re rapidly approaching some decisive days in the BTC ETF race. In doing so, we published a blog post looking into the possible implications of the various ETFs. For now, the futures-based ETFs seem to be the most likely to get approved, which could lead to further buying pressure of the front-month contract of the CME futures. This scenario will lead to attractive cash-and-carry opportunities. Such cash-and-carry opportunities may lead to buying pressure in the spot market.