It’s a new record for CME. Chicago Mercantile Exchange contracts have a large discount on Bitcoin’s spot market price.
These are futures contracts that are about to expire. CME quarterly policies tend to trade at a minimum premium. They have been trading at deep discounts for a few months, but have a premium when the market recovers in early August. However, this did not last long.
CME futures contracts on Bitcoin have been around since December 2017. CME’s trading contracts have not traded at low levels as of July 21, 2021. At that time, there appeared a short burst of hardcore. The liquidation amounted to more than $750 million compared to the short order, causing the opening interest rate to decrease by 47,000 BTC.
In this week’s edition of “The Weekly Update”:
🔹$750m worth of shorts liquidated in largest ever short squeeze in bitcoin
🔹Fuel for short squeezes: Stablecoin and USD denominated OI reaches 45% of global OI
🔹BTC capacity in Lightning surpass 2000 BTChttps://t.co/MQf7G9r4B3
— Arcane Research (@ArcaneResearch) July 27, 2021
In its most recent weekly report, Arcane Research addressed the CME future situation:
“The most traded BTC futures contract was CME, last month, trading with a sharp decline as the annual basis hit an all-time low yesterday, averaging at -3.36%.”
However, Arcane Research’s “Weekly Update” also identifies very specific factors. These relate to the ProShares Bitcoin Strategy ETF or BITO:
“The increasing decline in prices in contracts can be explained by structural impacts. BITO has begun implementing the contract May 8. This could cause downward pressure on last month’s contracts. Yesterday, BITO reached more than 1000 August contracts and will complete an additional 3000 August contracts on Friday. Previous rotation periods tended to be accompanied by a decrease in last month’s base. “