Bitcoin Trading Surges Amidst Record-Breaking Price Surge – DL News
- As Bitcoin soars to new heights, a profitable trading opportunity reappears.
- In May, Millennium invested $2 billion in Bitcoin ETFs, a move industry analysts then considered likely the foundation of the basis trade.
- Billions have been invested in ETFs following the election.
The surge of excitement in the market post-Trump’s election win has rekindled interest in a highly favored hedge fund strategy involving cryptocurrencies.
This particular strategy was seemingly embraced by the $60 billion behemoth Millennium Management when it scooped up approximately $2 billion of Bitcoin ETFs in May—a strategy which you can read more about here.
Presently, this method, known as the Bitcoin basis trade, is showing strong profitability.
The foundation of the basis trade lies in times when the heavy demand pushes Bitcoin futures prices above those of Bitcoin spot ETFs. Institutions like Millennium then deploy sophisticated algorithms to exploit these price discrepancies for profit.
Recently, the disparity between these two financial products hit a peak of 17% on the Chicago Mercantile Exchange, as evidenced by data from CF Benchmarks. This gap is reminiscent of that observed when Bitcoin ETFs debuted in January.
“The basis reflects market mood,” said Thomas Erdösi of CF Benchmarks. “The sustained gap in basis suggests a bullish market outlook for Bitcoin.”
The basis trade, however, is traditionally market-neutral—offering traders a chance to capitalize on market inefficiencies without necessarily having a stance on the future direction of Bitcoin prices.
Victory for Trump
Since the presidential victory of Donald Trump, Bitcoin has been setting new records in succession.
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Bitcoin has witnessed a surge exceeding $18,000 since November 5—an uplift of 27%.
“The crypto market has been simmering like a pressure cooker over the past half-year,” Timo Lehes of Swarm observed. He noted that the rapid rise was unexpected.
Erdösi considers the uptick in Bitcoin ETF spot inflows to be indicative of institutions engaging in this kind of trade.
On November 7, BlackRock’s Bitcoin ETF experienced unprecedented inflows, totaling $1.1 billion as per Farside data. And on Monday, IBIT recorded its third-largest influx, amassing nearly $757 million.
In the post-election period spanning four days, spot Bitcoin ETFs attracted nearly $3.5 billion in inflows, according to Nate Geraci of ETF Store.
Liam Kelly is DL News’ Berlin-based DeFi Correspondent. Have a lead? Send us a tip at
liam@dlnews.com
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