Since reaching all-time highs on Jan. 20, Bitcoin’s price has been suppressed by hedge funds exploiting a low-risk yield trade involving spot exchange-traded funds (ETFs) and CME futures, signaling once again that institutional adoption of crypto assets isn’t a one-way street.
This is the general takeaway of analyst Kyle Chassé, who dissected the latest Bitcoin (BTC) price crash in a thread on the X social media platform.
“For months, hedge funds were exploiting a low-risk yield trade using BTC spot ETFs & CME futures,” said Chassé. Now, this cash and carry trade is “imploding,” he said.
Source: Kyle Chassé
The cash and carry trade involved buying spot Bitcoin ETFs and shorting Bitcoin futures on CME, which allowed traders to earn up to 5.68% in annualized returns by Chassé’s calculation.
The success of this trade depended mainly on Bitcoin futures trading at a premium to the cryptocurrency’s spot price. However,…
