Bitcoin Price Crash to $50K Dashes Carry Traders’ Hopes

The recent decline in Bitcoin’s {{BTC}} price has narrowed the spread between futures and spot prices, reducing the appeal of carry trades that seek to profit from discrepancies between the two markets.

The leading cryptocurrency by market value fell more than 18% in 24 hours to $50,000, its lowest level since February 2024. The sell-off, part of broad-based risk aversion in global markets, is likely due to a sharp rise in the anti-risk Japanese yen and US bond market intrigue.

According to Velo Data, the annualized three-month futures premium on leading cryptocurrency exchange Binance has fallen to 3.32%, the lowest level since April 2023. Cryptocurrency exchanges OKX and Deribit are also seeing a similar decline in futures premiums.

Premiums fell along with spot prices. (Velo Data)

Meanwhile, futures on the regulated Chicago Mercantile Exchange, which is favored by institutions, now trade roughly in line with spot prices.

This means that the yield on the classic cash-and-carry strategy of taking a long position in the spot market or in U.S.-listed ETFs and simultaneously selling futures is now the same as or lower than the 10-year U.S. Treasury note.

The strategy was very popular among institutions in the first quarter, when futures traded at a premium of over 20 percent and accounted for a significant portion of inflows into spot ETFs.