Bitcoin’s CME Futures Premium Slips Lower, Suggesting Diminishing Institutional Appetite

Bitcoin CME Futures Premium Narrows to Lowest Since October 2023, Indicating Declining Institutional Interest

Bitcoin futures on the Chicago Mercantile Exchange (CME) have seen their premium decrease sharply, suggesting a weakening appetite from institutional investors, according to 10x Research.

The annualized premium on three-month rolling CME futures is currently at 4.3%, its lowest since October 2023, down from over 10% earlier this year.

Despite Bitcoin’s price staying above $100,000, the shrinking premium—or basis—signals growing uncertainty and a less optimistic outlook on future price movements.

This trend aligns with recent negative funding rates on major offshore perpetual futures exchanges, where futures trade below spot prices, indicating a bearish bias.

The reduced premium also complicates cash-and-carry arbitrage, where traders buy Bitcoin or ETFs on the spot market while shorting CME futures.

Markus Thielen, founder of 10x Research, told CoinDesk that when yield spreads fall below 10%, inflows into Bitcoin ETFs are driven more by directional investors than hedge funds focused on arbitrage, usually during price consolidation periods. Currently, spreads are at 1.0% for perpetual futures funding and 4.3% for the CME basis, reflecting reduced hedge fund arbitrage.

He also noted a slowdown in retail trading, evident from lower funding rates and decreased spot market volumes.

Padalan Capital echoed these observations in a weekly update, noting that falling funding rates point to diminished speculative activity.

They added that the negative inversion of the CME-to-spot basis for Bitcoin and Ethereum suggests aggressive institutional hedging or a significant unwind of cash-and-carry positions.