A reduction in U.S. rates could fuel renewed momentum for Bitcoin’s basis market.

Bitcoin
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$110,674.25

Bitcoin’s basis trade, which seeks to profit from the spread between spot and futures prices, has been largely muted in 2025. However, a likely Federal Reserve rate cut on Sept. 17 could reignite activity.

According to CME FedWatch, there is roughly a 90% probability that the Fed will lower the federal funds rate by 25 basis points from its current 4.25%-4.50% range. Looser monetary policy could encourage leveraged positions, driving futures premiums higher and reviving a trade that has remained subdued this year.

The basis trade involves taking offsetting positions in spot and futures markets, aiming to capture the price spread as contracts near expiry while limiting exposure to bitcoin’s volatility.

Currently, with interest rates above 4%, annualized returns on the basis trade—around 8%—have been less appealing. A rate cut could make the strategy more attractive compared to holding cash.

CME bitcoin futures open interest has fallen from over 212,000 BTC at the start of the year to roughly 130,000 BTC, according to Glassnode, mirroring levels seen during the January 2024 launch of spot BTC ETFs. Annualized basis returns have stayed below 10% this year, down from approximately 20% at the end of 2024, reflecting tighter funding, slowing ETF inflows, and a rotation of risk appetite away from BTC.

Bitcoin’s narrow trading range has also constrained futures premiums, with implied volatility hovering around 40, just above last week’s record low of 35.

If the Fed cuts rates, liquidity could improve, increasing demand for risk assets and lifting CME futures open interest. This scenario may provide the catalyst for the basis trade to rebound, drawing renewed institutional attention to the bitcoin market.