Key facts
- The bitcoin futures carry trade yielded over 20% during the 2021 bull market.
- Since February, the bitcoin futures carry trade has yielded less than short-term U.S. Treasuries.
- A decline in yield has contributed to a sharp drop in bitcoin futures volumes.
- Perpetual futures are a type of contract that lacks a fixed expiry date.
- The concept of perpetual futures dates back to the 1990s.
- Perpetual futures gained traction in crypto markets in 2016.
- CME sued the CFTC over the legal status of perpetual futures in the US.
- Governance is crucial for perpetual futures due to the absence of expiry dates.
The bitcoin futures carry trade has seen its profitability decline, now offering yields lower than those of short-term U.S. Treasuries since February. This trend marks a significant shift from the 2021 bull market, when this strategy could generate yields exceeding 20%. The reduced profitability of the bitcoin futures carry trade is a contributing factor to a sharp drop observed in bitcoin futures trading volumes.