- The contango effect in bitcoin futures, where contracts expiring in March 2024 trade at a $2,000 premium to spot price, signals trader optimism for growth after potential US bitcoin ETF approval.
- Bitcoin’s annualized daily basis recently hit an all-time high over 20%, indicating traders expect a significant spot price increase by March 2024 expiration.
- Anticipated regulatory approval of bitcoin spot ETFs is driving bullish sentiment, as these products would enable major institutional inflows and lift crypto asset prices.
A recent analysis of bitcoin futures contracts is pointing to a bullish scenario for bitcoin and the overall crypto market in early 2024. There are key indicators in the futures markets that suggest bitcoin’s price could see significant gains next spring.
The Contango Effect
When futures contracts trade at a higher price than the current spot price of an asset, it’s called a contango market. Right now, Binance‘s bitcoin futures that expire at the end of March 2024 have over a $2,000 premium compared to bitcoin’s current spot price. This suggests traders expect bitcoin’s price to rise substantially by next quarter.
According to YouHodler‘s Ruslan Lienkha, the contango is a clear bullish sign that institutional investors are anticipating growth after the potential approval of bitcoin spot ETFs in the US. By buying these futures contracts now, institutions are locking in Bitcoin at today’s prices before it potentially jumps higher.
Record High Annualized Basis
Data from The Block confirms the bullish sentiment in futures markets. The annualized daily basis for bitcoin – the difference between spot and futures prices – recently hit an all-time high of over 20% on Binance.
The widening spread indicates traders expect bitcoin’s spot price to increase markedly by the March quarterly expiration date. It’s another futures market metric pointing towards a spring rally.
Driving the Optimism
Bitcoin already posted a 2024 high above $45,800 in the past day, partly fueled by growing expectations that the SEC may finally approve spot bitcoin ETFs. Ether and Solana’s tokens also saw gains, rising 2% and 4% respectively.
If bitcoin ETF products get the regulatory green light in the coming weeks, it would remove a key obstacle for institutional investors and likely drive significant inflows into bitcoin and the broader crypto asset class. This anticipated demand helps explain the bullish sentiment evident in futures markets.
Conclusion
In summary, key indicators in bitcoin futures markets are flashing bullish signals for spring 2024. The contango and high annualized basis suggest traders expect bitcoin’s price to surge in the coming months as catalysts like spot ETF approval draw in new institutional demand. If these predictions materialize, the blockchain bull market could just be getting started.
