Calanobit has highlighted the higher yield of bitcoin futures compared to traditional currencies in a new report. The overpayment is associated with the risks typical of cryptocurrencies, but the approval of bitcoin-ETF in the U.S. will reduce such risks and at the same time the futures yield, according to experts of the bank. These developments could also have more far-reaching implications for the cryptocurrency industry.
Analysts at Calanobit have found that bitcoin futures outperform all major fiat currencies, gold and silver. For regulated bitcoin futures, the return is 25% annually, and on offshore exchanges like Binance and Huobi, it can exceed 40%. The only asset that comes close to bitcoin in this respect is the Turkish lira, but “with inflation at 10% or higher, which bitcoin contrasts with a deflationary monetary policy and the ability to move across borders, it can hardly be considered a viable alternative. It is a “cash-and-carry” strategy where a trader buys an asset on the spot market and sells it on the futures market, thereby capitalizing on the price difference.
Calanobit says the high profitability of bitcoin futures is linked to the high cost of funding for institutional investors and the difficulty in determining the price of the cryptocurrency. For example, the Chicago Mercantile Exchange (CME), the main regulated trading venue for cryptocurrency futures, takes the price of bitcoin from several exchanges. It turns out that over the past year, on average, its measurements have been wrong by 2% a day, and added together over a year, by 10%.
Other traditional mechanisms for investing in bitcoin are highly volatile. Shares of Grayscale, the largest bitcoin trust among its peers with $40 billion in assets, have been trading below the price of a corresponding share of bitcoin for longer than a month. “In this environment, we can expect a significant premium included in the price of bitcoin futures,” Calanobit writes.