BTC December futures reach $73,500 — Is everyone flipping ultra bullish?


Bitcoin (BTC) has been trying to break through the $60,000 resistance for almost a month. But despite the impasse, the BTC futures markets have never been more bullish. While regular spot exchange is quoting around $59,600, BTC contracts that expire in June are quoting over $65,000.

Futures are usually traded at a premium, especially in neutral markets, and this is done with all assets, including commodities, stocks, indices and currencies. However, it is extremely rare for the annual premium (basic premium) to be 50% for policies that expire in three months.

Futures curveBTC, in US dollars. Source:

Unlike a perpetual contract – or a reverse swap – these fixed-term futures contracts have no funding rate. Consequently, their price will be very different from that of the usual cash trade. From the buyer’s perspective, fixed-term contracts eliminate potential spikes in financing rates, which can be as high as 43% per month.

On the other hand, the seller benefits from a predictable premium that typically includes long-term arbitrage strategies. By simultaneously buying BTC cash (regular) and selling futures, you can achieve zero risk with a predetermined profit. Therefore, the seller of futures demands a higher profit (premium) when the markets rise.

Three-month futures contracts typically trade at a 10-20% premium to ordinary cash transactions, justifying blocking funds rather than immediate payment.

Annual premium for 3-month forward OKEx BTC contracts (base). Source:

BTC December futures reach $73,500 — Is everyone flipping ultra bullish?

The chart above shows that even during the 250% rally between March and June 2019, the futures base remained below 25%. Only recently, in February 2021, did such phenomena occur again. Bitcoin jumped 135% in 60 days before the 3-month futures premium on the 8th. February 2021 exceeded the 25% annualized mark.

While professional traders prefer futures contracts with a fixed monthly schedule, open contracts dominate the retail market to avoid the hassle of expiration. In addition, it is expensive for retailers to pay nominal premiums of 10% or more, although reverse swaps are more expensive when refinancing rates are taken into account.

Perpetual term funding rate based on BTC coins. Source:

While the recent 8-hour funding ratio of 0.20% is extraordinary, it is certainly not uncommon for the BTC markets. Such a charge amounts to 19.7% per month, but rarely lasts more than a few days.

High refinancing rates force arbitrage committees to intervene by buying fixed futures and selling open futures. Excessive leverage in retail long positions therefore leads to a higher base of futures contracts, and not vice versa.

Since crypto-derivative markets remain largely unregulated, inefficiencies will continue to exist. While a 50% profit margin may seem excessive, it should be kept in mind that retailers have no other way to strengthen their position. This in turn leads to distortions in time, but these are not necessarily a problem from a trade point of view.

Despite the still exorbitant rates on financing rates, financing with long-term debt will have to be closed due to rising costs. Therefore, the December contract of $73,500 may not reflect investor expectations and this premium should be reduced.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.

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Emilia James
By Emilia James

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