Bitcoin futures data highlight investors’ bullish view, but there’s a catch

Bitcoin (BTC) rate rose by 26.5% in October and a number of indicators struck a 1 year high, including the BTC futures premium and the Grayscale GBTC discount. For this factor, its challenging to provide a bearish thesis for BTC as information shows the post-FTX-Alameda Research collapse healing period and is also influenced by the current boost in rate of interest by the U.S. Federal Reserve.Despite the positive indicators, Bitcoin price still stays around 50% below its all-time high of $69,900 which was hit in November 2021. On the other hand, gold is trading simply 4.3% listed below its $2,070 level from March 2022. This stark difference lessens the significance of Bitcoins year-to-date gains of 108% and highlights the truth that Bitcoins adoption as an alternative hedge is still in its early stages.Before deciding whether the improvement in Bitcoin futures premium, open interest and the GBTC fund premium signal a go back to the norm, or the preliminary signs of institutional investors interest, its necessary for financiers to examine the macroeconomic environment.The U.S. budget plan issue stimulates Bitcoins institutional hopeOn Oct. 30, the U.S. Treasury announced strategies to auction off $1.6 trillion of debt over the next six months. Nevertheless, the crucial aspect to view is the size of the auction and the balance between shorter-term Treasury costs and longer-duration notes and bonds, according to CNBC.Billionaire and Duquesne Capital creator Stanley Druckenmiller criticized Treasury Secretary Janet Yellens focus on shorter-term debt, calling it “the greatest oversight in the history of the Treasury.” This unprecedented boost in the financial obligation rate by the worlds biggest economy has actually led Druckenmiller to applaud Bitcoin as an alternative store of value.The rise in Bitcoin futures open interest, reaching its highest level considering that May 2022 at $15.6 billion, can be credited to institutional need driven by inflationary risks in the economy. Significantly, the CME has actually become the second-largest trading location for Bitcoin derivatives, with $3.5 billion notional of BTC futures.Moreover, the Bitcoin futures premium, which measures the distinction between 2-month agreements and the area cost, has actually reached its highest level in over a year. These fixed-month agreements typically trade at a minor premium to spot markets, suggesting that sellers are requesting more cash to postpone settlement.Bitcoin 2-month futures annualized premium. Source: LaevitasThe demand for leveraged BTC long positions has actually significantly increased, as the futures contract premium jumped from 3.5% to 8.3% on Oct. 31, surpassing the neutral-to-bullish threshold of 5% for the very first time in 12 months.Further boosting the speculation of institutional demand is Grayscales GBTC fund discount narrowing the gap to the equivalent underlying BTC holdings. This instrument was trading at a 20.7% discount rate on Sept. 30 however has since decreased this deficit to 14.9% as investors prepare for a greater possibility of a spot Bitcoin exchange-traded fund (ETF) approval in the U.S.Not everything is rosy for Bitcoin, and exchange dangers loomWhile the information seems undoubtedly favorable for Bitcoin, especially when compared to previous months, investors ought to take exchange-provided numbers with caution, particularly when dealing with uncontrolled derivatives contracts.The U.S. interest rate has actually risen to 5.25%, and exchange threats have actually intensified post-FTX, making the 8.6% Bitcoin futures premium less bullish. For comparison, the CME Bitcoin annualized premium stands at 6.8%, while Comex gold futures trade at a 5.5% premium, and CMEs S&P 500 futures trade at 4.9% above area prices.Related: Will weakness in Magnificent 7 stocks infected Bitcoin price?The Bitcoin futures premium, in the wider context, is not exceedingly high, specifically thinking about that Bloomberg experts provide a 95% chance of approval for a Bitcoin area ETF. Investors are also mindful of the general risks in cryptocurrency markets, as highlighted by U.S. Senator Cynthia Lummiss call for the Justice Department to take “swift action” against Binance and Tether.The approval of a spot Bitcoin ETF might trigger offer pressure from GBTC holders. Part of the $21.4 billion in GBTC holdings will finally be able to leave their positions at par after years of limitations enforced by Grayscales administration and outrageous 2% annual costs. In essence, the positive data and performance of Bitcoin show a return to the mean rather than extreme optimism.This post is for basic information functions and is not meant to be and must not be taken as legal or financial investment suggestions. The viewpoints, views, and thoughts expressed here are the authors alone and do not necessarily show or represent the views and viewpoints of Cointelegraph.