Return Of CME Futures Premium Hints At Q4 Bitcoin Bull Run

As Bitcoin touches $55k today, CME’s futures premium has reached highs not seen since April. This could hint at a Q4 bull run for Bitcoin.

CME’s Annualized Basis On The Front-Month Contract Reaches Highs Not Seen Since April

As per the latest report from Arcane Research, premium on CME’s annualized basis on the front-month contract has surged to values not touched since April.

Chicago Mercantile Exchange (CME) is the world’s largest financial derivatives exchange that trades in a variety of assets. Along with Bitcoin and other crypto futures, the exchange also features other commodities like energy, metals, and stock indexes.

If you don’t know what a futures contract is, it’s basically a type of trading where you bet on the future price of an asset. Depending on whether your prediction was correct or not, you take profits or losses.

In this type of trading, you don’t actually have to own Bitcoin (or any other commodity for that matter). You only need to get a futures contract.

To obtain such a contract, you first need some minimum collateral (called the margin here) that could be both in crypto or fiat.

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These contracts work both ways, you can either go for a long (that is, bet that the price will go up) or go for a short (the price will depreciate).

CME’s most popular Bitcoin futures contract is the annualized basis on front-month contract. Here is a chart showing how the premium on this contract has changed over the last year:

CME's BTC futures annualized rolling 1-month basis | Source: Arcane Research

As the above chart shows, the premium on these contracts seems to have surged up recently to levels not seen since April 2021.

Currently, the values are around 8% to 10% while during the period since May until now, they remained around 3 to 5%.

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High premiums like these show there is a high demand among institutional investors for building long exposure in Bitcoin. This shows that there is a bullish sentiment in the market right now.

Bitcoin Price

At the time of writing, Bitcoin’s price floats around $54.8k, up 32% in the last seven days. Over the last month, the crypto has gained 6% in value.

Here is a chart showing the trend in the price of the coin over the last 24 hours:

BTC's price makes a very sharp move up | Source: BTCUSD on TradingView

In an incredible move up, Bitcoin went to as high as nearly $55.5k today. Given the high CME futures premium, it’s looking likely that this run could continue even further.

Featured image from Unsplash.com, charts from TradingView.com, Arcane Research