The leading cryptocurrency, Bitcoin BTC/USD, has surpassed the $41,000 mark for the first time since April 2022. The surge has led analysts to forecast a potential 10% return on market-neutral bets.
What Happened: The basis trade, a type of market-neutral strategy, offers an annualized return of 10% at the moment, CoinDesk reported. This involves taking a long position in the spot market and selling futures when they trade at a premium to the spot price.
Deribit, a crypto derivatives exchange, disclosed that its front-month, three-month, and longer-dated futures contracts traded at an annualized premium of 8% to 12%. This suggests traders could anticipate an 8% to 12% return (excluding trading costs) using this strategy.
"The cash-carry basis trade is hinting at a resurgence. Currently, the futures basis is hovering near YTD highs, around 10%," said Samneet Chepal, a crypto quant researcher.
The return based on trade significantly surpasses the 4.2% risk-free rate offered by the U.S. 10-year Treasury note. Chepal forecasts that with anticipated ETF news in early Q1 next year, these figures could rise even further.
Bitcoin’s value has increased by 54% since Oct. 1, owing to several factors. These include the expected launch of one or more spot-based exchange-traded funds in the U.S., escalating geopolitical tensions, easing concerns following Binance's legal settlement, and increased institutional engagement.
Why It Matters: The rise of Bitcoin comes after a period of “Neutral” sentiment on the Bitcoin Fear and Greed Index, a significant shift after nine months of “Fear” zones.
However, not all analysts maintain a bullish outlook. Ex-Ark Invest analyst Chris Burniske anticipates the crypto market’s momentum to cool down soon. Regardless, the current surge and projected returns on market-neutral bets indicate a promising short-term future for Bitcoin investors.
Read Next: ‘Dogecoin Killer’ Shiba Inu Burn Rate Skyrockets By 500% As Shibarium Logs Over 4M Transactions
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