Bitcoin Futures Cash-And-Carry Trade Profitability Drops

Bitcoin Futures Cash-And-Carry Trade Profitability Drops

There appears to be less excitement in the futures market as the selling pressure on the price of Bitcoin (BTC) persists. There currently needs to be more juice left for the traders to squeeze since the profitability in the Bitcoin futures cash-and-carry trade has been falling more quickly.

Cash-and-Carry Bitcoin Transactions

In the derivatives market, cash-and-carry trades—which entail purchasing the asset in the spot market and selling it concurrently in the futures market—are prevalent.

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A few weeks prior, investors in BTC futures could lock in an almost risk-free 10% annualized premium for cash-and-carry transactions. This indicates that every year, there was a 10% discrepancy between the spot price of BTC and the price of BTC futures.

However, for the traders to keep BTC and margin in addition to future contracts, the returns are effectively reduced to 5%. This annualized premium has decreased to 6%, or more accurately, 3% when considering the margin expenses associated with holding in the spot markets.

The BTC cash-and-carry transaction loses appeal if its annualized returns are less than the risk-free return. According to well-known cryptocurrency analyst Checkmate, the “End of the juice left to squeeze” in Bitcoin is when the profitability of trading BTC futures becomes unappealing. As a result, it’s likely that Bitcoin traders will start seeking other options when the profits from cash-and-carry BTC futures trades become too small to offset the risks involved.

The #Bitcoin futures cash-and-carry trade is very likely reaching the end of the juice left to squeeze.

A few weeks ago, traders could lock in an almost risk-free 10% annualised premium by being long spot, short futures. Technically this is ~5% as you need capital on both sides.…

— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) June 24, 2024

Future Changes in the Price of Bitcoin

The price of Bitcoin has already dropped more than 12% from its June highs, leading some to predict that a $60,000 price tag is close. Additionally, according to BTC expert Checkmate, the sell-side risk ratio for BTC has reached levels that indicate a significant change is about to occur.

“Every profit that was anticipated to be made has been. Likewise with losses,” he clarified. The Bitcoin analyst went on to say that the market would set a new price range, which would cause feelings of panic, exhilaration, anxiety, or greed to flare up and drive the next stage of market movement.

The price of BTC is currently creating a falling wedge in the lower time frame, as seen below, with a more significant likelihood of falling to $60,000.

#BITCOIN LTF Chart$BTC is forming a falling wedge in the lower time frame. Open any trade only after a breakout.
Never open a trade blindly!

— Crypto Patel (@CryptoPatel) June 22, 2024

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