Bitcoin futures data highlight investors’ bullish view, but there’s a catch

Bitcoin (BTC) terms surged by 26.5% successful October and respective indicators deed a one-year high, including the BTC futures premium and the Grayscale GBTC discount. 

For this reason, it's challenging to contiguous a bearish thesis for BTC arsenic information reflects the post-FTX-Alameda Research illness betterment play and is besides influenced by the caller summation successful involvement rates by the U.S. Federal Reserve.

Despite the affirmative indicators, Bitcoin terms inactive remains astir 50% beneath its all-time precocious of $69,900 which was deed successful November 2021. In contrast, golden is trading conscionable 4.3% beneath its $2,070 level from March 2022. This stark quality diminishes the value of Bitcoin's year-to-date gains of 108% and highlights the information that Bitcoin's adoption arsenic an alternate hedge is inactive successful its aboriginal stages.

Before deciding whether the betterment successful Bitcoin futures premium, unfastened involvement and the GBTC money premium awesome a instrumentality to the norm, oregon the archetypal signs of organization investors' interest, it's indispensable for investors to analyse the macroeconomic environment.

The U.S. fund contented sparks Bitcoin’s organization hope

On Oct. 30, the U.S. Treasury announced plans to auction disconnected $1.6 trillion of indebtedness implicit the adjacent six months. However, the key factor to ticker is the size of the auction and the equilibrium betwixt shorter-term Treasury bills and longer-duration notes and bonds, according to CNBC.

Billionaire and Duquesne Capital laminitis Stanley Druckenmiller criticized Treasury Secretary Janet Yellen's absorption connected shorter-term debt, calling it "the biggest blunder successful the past of the Treasury." This unprecedented summation successful the indebtedness complaint by the world's largest system has led Druckenmiller to praise Bitcoin arsenic an alternate store of value.

The surge successful Bitcoin futures unfastened interest, reaching its highest level since May 2022 astatine $15.6 billion, tin beryllium attributed to organization request driven by inflationary risks successful the economy. Notably, the CME has go the second-largest trading venue for Bitcoin derivatives, with $3.5 cardinal notional of BTC futures.

Moreover, the Bitcoin futures premium, which measures the quality betwixt 2-month contracts and the spot price, has reached its highest level successful implicit a year. These fixed-month contracts typically commercialized astatine a flimsy premium to spot markets, indicating that sellers are requesting much wealth to hold settlement.

Bitcoin 2-month futures annualized premium. Source: Laevitas

The request for leveraged BTC agelong positions has importantly increased, arsenic the futures declaration premium jumped from 3.5% to 8.3% connected Oct. 31, surpassing the neutral-to-bullish threshold of 5% for the archetypal clip successful 12 months.

Further bolstering the speculation of organization request is Grayscale's GBTC money discount narrowing the spread to the equivalent underlying BTC holdings. This instrumentality was trading astatine a 20.7% discount connected Sept. 30 but has since reduced this shortage to 14.9% arsenic investors expect a higher likelihood of a spot Bitcoin exchange-traded money (ETF) support successful the U.S.

Not everything is rosy for Bitcoin, and speech risks loom

While the information seems undeniably affirmative for Bitcoin, particularly erstwhile compared to erstwhile months, investors should instrumentality exchange-provided numbers with caution, peculiarly erstwhile dealing with unregulated derivatives contracts.

The U.S. involvement complaint has surged to 5.25%, and speech risks person escalated post-FTX, making the 8.6% Bitcoin futures premium little bullish. For comparison, the CME Bitcoin annualized premium stands astatine 6.8%, portion Comex golden futures commercialized astatine a 5.5% premium, and CME's S&P 500 futures commercialized astatine 4.9% supra spot prices.

Related: Will weakness successful Magnificent 7 stocks dispersed to Bitcoin price?

The Bitcoin futures premium, successful the broader context, is not excessively high, particularly considering that Bloomberg analysts springiness a 95% accidental of support for a Bitcoin spot ETF. Investors are besides mindful of the wide risks successful cryptocurrency markets, arsenic highlighted by U.S. Senator Cynthia Lummis's telephone for the Justice Department to take "swift action" against Binance and Tether.

The support of a spot Bitcoin ETF could trigger merchantability unit from GBTC holders. Part of the $21.4 cardinal successful GBTC holdings volition yet beryllium capable to exit their positions astatine par aft years of limitations imposed by Grayscale's medication and exorbitant 2% yearly fees. In essence, the affirmative information and show of Bitcoin bespeak a instrumentality to the mean alternatively than excessive optimism.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.