“Behind the move is a sharp narrowing in the profitability of the base trade, in which traders attempt to capture a spread by buying spot bitcoin while selling BTC futures.”, — write: www.coindesk.com
CME OI started the year at 175,000 BTC, but that level has steadily fallen as the profitability of the base trade — in which traders buy spot bitcoin while simultaneously selling futures to capture the price premium between the two markets — has declined.
Open interest on Binance, however, has remained steady throughout the year as it’s the exchange more likely to be favored by retail punters betting on directional price movements.
Just more than a year ago, CME OI reached a record 200,000 BTC as prices rallied toward $100,000 following President Trump’s election victory. At that time, the annualized base rate surged to around 15%.
Today, the CME base rate has compressed to roughly 5%, according to Velo data, reflecting diminishing returns for institutional basis traders.
As spot and futures prices converge and market efficiency improves, arbitrage opportunities continue to shrink. CME had been the largest exchange for bitcoin futures OI since November 2023, driven by institutional positioning ahead of the launch of spot bitcoin ETFs in January 2024. That advantage, for the moment, appears to have faded.
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Crypto continues to lose ground ahead of this week’s record options expiration, while defensive positioning and thinning liquidity suggest caution into 2026.
- Bitcoin and crypto prices moved steadily lower in US Monday afternoon trading.
- Over $28.5 billion in bitcoin and ether options are set to expire Friday on derivatives exchange Deribit, the largest expiration in its history.
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