2024 started strongly for the futures market as the Chicago Mercantile Exchange Bitcoin (CME) Bitcoin (BTC) futures traded at $47,040 on January 2, surpassing the spot price. This surprising movement has prompted analysts to dig deeper into its cause and implications for the broader crypto market. Additionally, there is speculation about whether this price action is exclusive to CME or if it foreshadows future price movements.
Some analysts have suggested that the surge in CME Bitcoin futures may be linked to market expectations surrounding the potential approval of a spot Bitcoin Exchange-Traded Fund (ETF). With a senior analyst at Bloomberg expressing a 90 percent probability of the ETF approval by January 10, market sentiment and anticipation are high.
Examining the market behavior, analysts have noted that a typical healthy market sees monthly futures contracts trading at a 5 percent to 10 percent basis rate to account for extended settlement times. However, the CME’s Bitcoin futures have shown a relatively low premium compared to the BTC spot market, staying under $350, representing a mere 14 percent annual increase from January 2023 to November 2023.
On November 24, 2023, the CME Bitcoin futures premium experienced a substantial surge to $900, the highest recorded in over two years. This sudden movement was preceded by a 41 percent surge in the Bitcoin price to $37,750, further adding to the significance of this event.
It’s worth noting that the aggressive buying activity was primarily limited to CME, as evidenced by the substantial variations in client profiles and margin requirements compared to other crypto exchanges. The BTC options market has also been reported to be neutral in relation to pricing put and call options since December 6, 2023.
As of the latest update, Bitcoin (BTC) was trading at $43,113.43, having surged 57% in the last three months. However, the asset currently has a bearish sentiment with a score of 32/100 and has declined by 3.71% in the past 24 hours. Despite this, a price prediction platform suggests that Bitcoin could reach as high as $120,717.60 by the end of the year, signaling potential for significant growth in the market.
