Bitcoin futures trading at a not-so-high premium

The rise in volatility has made the cryptocurrency market a very competitive space as every coin strives to make the most of the active market. Bitcoin, the largest digital asset has been also a spectator of sudden volatility pushing it to a yearly peak of $12,400 on 17 August. After the sudden boost in volatility, there was a dip in the value of BTC.

As the market stabilized over the past week, open interest also steadied leading to reduced premiums of the futures contract. BTC futures premium rates were soaring at the beginning of August when the market was rallying higher. At the time, Chicago Mercantile Exchange [CME] was witnessing premiums for September increase from 2.05% to 2.76%, while retail platforms were also witnessing a rate of 2.25% for September. The annualized premium rates for CME was 19.11% and other platforms followed at 15.59%.

However, with a stabilizing price, the premiums of the retail-focused platforms have fallen from 18% to 10% over the last week. CME premium remained significantly higher than retail platforms as it stood at 18%, having fallen from 21% the last week, according to data provided by Arcane Research.

Source: Arcane Research

This indicated that the institutional investors were more bullish on BTC in the short term than the retail investors. The premium rates for September contracts on CME were close to 1.59%, whereas other platforms were noticing 0.89% premium rates.

As the premiums fall, the open interest on CME has reduced but not dipped. OI stood at $713 million on 25 August, whereas Bakkt’s OI had dipped to $9.5 million from a peak of $27 million. This loss in OI could be a result of BTC futures for August that expired last week.