BTC CME Futures Spread Slides to $490, Undoing The ‘Trump Bump’
The bullish sentiment following Donald Trump’s win in the November 5 Presidential elections appears to be dissipating, as indicated by the spread between continuous next-month and front-month Bitcoin (BTC) futures traded on the CME. This narrowing spread has reached $495, the lowest level since the day of the election, after having peaked at $1,705 on December 17, according to data from TradingView. This reversal signals a significant decline in market bullishness, suggesting that traders are tempering their price expectations.
Thomas Erdösi, head of product at CF Benchmarks, pointed out to CoinDesk that the current narrowing of the futures spread may reflect a broader market sentiment shift. As the impact of the Trump election victory fades, macroeconomic factors are returning to influence BTC trading.
The statistics corroborate this trend. Both Bitcoin and the Nasdaq Composite Index have fallen sharply, experiencing drops of 20% and 8%, respectively, since early February. This downturn is attributed to a range of factors, including geopolitical tensions, concerns over inflation, and the implications of Trump’s policies, particularly his tariffs.
Adding to these headwinds, the market reacted negatively to the announcement of a Strategic Bitcoin Reserve by the Trump administration. While there was hope that this reserve would involve the acquisition of new Bitcoin, it was clarified that existing and seized Bitcoins would not be sold. Ian Balina, founder and CEO of Token Metrics, described this as a disappointment for the market, indicating that it led to a notable drop in Bitcoin’s price.
Despite the current retracement, the overall futures market remains structured in contango. This scenario, where distant futures contracts are trading at a premium over near-term contracts, typically arises due to factors like storage costs and market expectations of future price increases. Erdösi noted that the positive perpetual funding rates and the contango condition suggest that the recent market movements have been more about a squeeze on unleveraged spot longs than a broad contagion affecting confidence in the crypto market as a whole.
