The allure of carry trades has been diminished as a result of the recent price decline of Bitcoin, which has reduced the disparity between spot and futures prices.
In the span of 24 hours, the foremost crypto has plummeted by more than 18% to $50,000, marking its lowest point since February 2024.
The sell-off is believed to result from global risk aversion, likely due to the increase in the Japanese yen and U.S. bond market issues.
The annualized three-month futures premium on Binance, the premier cryptocurrency exchange, has decreased to 3.32%, the lowest level since April 2023.
The futures premiums of OKX and Deribit, two crypto exchanges, are also experiencing comparable declines. The traditional cash and carry strategy entails selling futures and maintaining a long position in the spot market or U.S.-listed ETFs, which is currently equivalent to or less expensive than the 10-year U.S. Treasury note.
