Bitcoin Futures Cash-And-Carry Trading Tanks Profitability, Are You Paying Attention?
As the selling pressure on the Bitcoin (BTC) price continues, the futures market looks less exciting than before. Currently, profitability in Bitcoin futures cash and carry trading is falling faster with little juice for traders to squeeze.
bitcoin cash and carry transactions
Cash and carry transactions are very popular in derivative markets, which involve the strategy of purchasing the asset in the spot market and simultaneously selling it in the futures market.
just a few weeks ago, Bitcoin futures traders were able to earn a virtually risk-free 10% annual premium on cash and carry. This also means that the difference between BTC futures and BTC spot price is 10% on an annual basis.
However, investors need capital to hold Bitcoin and margin alongside futures contracts, effectively reducing returns to 5%. Interestingly, this annual premium is now down to 6%; technically 3%, considering the margin costs of holding in spot markets.
If the annual return on Bitcoin Cash-and-Carry trading falls below the risk-free return, it becomes less attractive. Popular crypto analyst Checkmate states that Bitcoin is “the end of the juice squeeze” as profitability in Bitcoin futures trading is no longer attractive. Therefore, there is a very high probability that Bitcoin investors will start looking for other alternatives as the returns of Bitcoin futures cash and carry trading are no longer attractive enough to justify the risks involved.
BTC Price Action Ahead#Bitcoin The future cash and carry trade is likely to reach the end of its remaining water.
A few weeks ago, investors could earn an almost risk-free annual premium of 10% by trading long spot and short futures. Technically this is ~5% since you need capital on both sides.… pic.twitter.com/sj1jTUBgST
— _Checkmate ????????
???? (@_Checkmatey_) June 24, 2024
While Bitcoin price has already corrected more than 12% from its June highs, analysts are predicting $60,000 is imminent. Bitcoin analyst Checkmate also noted that BTC’s sell-side risk ratio has reached levels that indicate a major shift is imminent.
“All profits due have been taken. “Same for casualties,” he explained. The Bitcoin analyst added that the Bitcoin market will form a new price range, thus driving the next phase of market movement by igniting emotions such as fear, greed, panic or euphoria.
As shown below, Bitcoin price is currently forming a falling wedge on the lower timeframe and there are higher chances of a drop to $60,000.
✓ Share:
Bhushan is a FinTech enthusiast and has a good ability to understand financial markets. His interest in economics and finance draws his attention to the emerging Blockchain Technology and Cryptocurrency markets. He is in a constant learning process and motivates himself by sharing the knowledge he has acquired. In her spare time, she reads thriller novels and sometimes explores her culinary skills.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.
#Bitcoin #Futures #CashAndCarry #Trading #Tanks #Profitability #Paying #Attention