CME Bitcoin Futures Premium Drops, Pointing to Fading Institutional Demand

Bitcoin CME Futures Premium Drops to Lowest Since October 2023, Indicating Reduced Institutional Demand

The premium on Bitcoin (BTC) futures traded on the Chicago Mercantile Exchange (CME) has significantly decreased, signaling weakening interest from institutional investors, according to 10x Research.

Currently, the annualized premium on rolling three-month CME futures sits at 4.3%, its lowest level since October 2023. Earlier this year, the premium was above 10%, marking a sharp decline.

Although Bitcoin’s price remains above $100,000, the shrinking futures premium—or basis—reflects growing uncertainty and less bullish sentiment about future price movements.

This trend matches recent shifts in funding rates for perpetual futures on major offshore platforms, which have turned negative. Negative funding rates suggest perpetual futures are trading below spot prices, indicating a preference for short positions.

The falling premium also affects traders who use cash-and-carry arbitrage strategies, which involve buying Bitcoin or ETFs on the spot market while shorting CME futures simultaneously.

Markus Thielen, founder of 10x Research, told CoinDesk, “When yield spreads fall below 10%, inflows to Bitcoin ETFs are mainly driven by directional investors rather than arbitrage hedge funds, typically during periods of price consolidation. Currently, perpetual futures funding rates stand at 1.0%, and CME basis rates are at 4.3%, indicating a drop in hedge fund arbitrage.”

Thielen added that retail trading activity has also slowed, as seen in lower funding rates and decreased spot volumes.

Padalan Capital echoed this view in a weekly update, stating that falling funding rates point to reduced speculative activity.

They further noted, “A clear sign of risk aversion is the inversion of CME-to-spot basis for Bitcoin and Ethereum into negative territory, suggesting aggressive institutional hedging or significant unwinding of cash-and-carry trades.”