The CME’s Bitcoin Futures Premiums Have Increased, Indicating Increased Institutional Demand


The Chicago Mercantile Exchange (CMEfutures ) ‘s premiums have skyrocketed to levels not seen since April, as the price of Bitcoin has risen to $55,000. This might indicate that the flagship cryptocurrency is on the verge of a bull run in Q4.

The fact that Federal Reserve Chairman Jerome Powell and SEC Chairman Gary Gensler have stated that the US has no plans to prohibit cryptocurrencies appears to be contributing to Bitcoin’s recent bullishness. In addition, the crypto boom tends to coincide with periods of low volatility. Bitcoin’s current price suggests that the cryptocurrency has shaken off fears of further Chinese crackdowns and Fed tightening.

Aside from that, the recent surge in bitcoin’s price beyond $50,000 looked to be underpinned by fresh institutional buying.

CME traders are now eager for Bitcoin futures, according to data from Arcane Research. According to Arcane Research, front-month Bitcoin futures contracts based on the Chicago Mercantile Exchange are trading at an annualized premium of 10% to spot pricing. This is the greatest level — current values are between 8% and 10%, a level not seen since May of this year when they were between 3 and 5%.

According to Arcane Research, the premium growth implies significant demand among institutional investors for developing long positions in Bitcoin, indicating the positive sentiment in the market at the moment.

“The front-month contract on CME is by far the most frequently traded BTC futures contract on the exchange, and right now, bullish tendencies seem to be brewing on the institutional platform,” Arcane noted.

Meanwhile, the CME is typically associated with educational institutions. Large institutions prefer to trade futures of any product on a regulated and well-established exchange like the Chicago-based derivatives behemoth. Apart from expanding their long Bitcoin holdings, big institutions are increasing their positions in CME ether futures, diversifying their portfolios.

Institutions have been reducing their Bitcoin futures holdings in favor of Ether futures since May of this year. However, they are now growing their Bitcoin futures while maintaining Ether futures, which have stayed mostly constant since early September at little over 1,400 contracts. This indicates growing institutional interest in the CME’s Bitcoin and altcoin futures contracts, which generally demand a large amount of cash from institutional investors.


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