Institutional Bitcoin Investors Have Their Own Trading Strategies: Here's One

The Bitcoin BTC/USD market has seen a notable uptick in futures trading, with open interest reaching an all-time high (ATH) of $32.9 billion, signaling increasing leverage and institutional participation.

What Happened: Glassnode's weekly report highlights that a significant portion of this surge is being driven by a cash-and-carry strategy, where traders capture yield by holding spot positions while shorting futures contracts.

The cash-and-carry trade, which has gained popularity among institutional investors, is yielding around 9.6%, nearly double the rate offered by short-term U.S. Treasuries.

The CME Group has played a pivotal role in this increase, as open interest in CME futures contracts reached $11.3 billion—another ATH—driven by institutional traders seeking exposure through regulated instruments.

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"This product has provided the new wave of institutional investors with an instrument for regulated derivative exposure," the report notes.

The increase in CME futures open interest, coupled with ETF net flows, suggests that institutions are pairing long-spot ETF positions with short CME futures to capture yields through the basis trade.

While open interest is at a record high, volumes across futures markets have remained relatively subdued at $35 billion per day, especially when compared to the elevated volumes seen when Bitcoin peaked at $73,000 in March 2024.

This suggests that much of the current activity is driven by single trade basis strategies and arbitrage positions rather than directional trades.

What’s Next: As institutional involvement grows, these trends will be further discussed at Benzinga's Future of Digital Assets event on Nov. 19, where industry leaders will analyze how strategies like cash-and-carry are shaping the future of Bitcoin and digital asset investments.

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