Impending Futures-Based Bitcoin ETFs May Boost Cash and Carry Yields

Impending Futures-Based Bitcoin ETFs May Boost Cash and Carry Yields

Assuming Wall Street embraces these ETFs, the futures premium, or the spread between futures prices and spot prices, would rise significantly, boosting yields from cash and carry strategy, which involves buying the asset in the spot market and simultaneously selling futures contracts. Carry trades are direction-neutral and profit from an eventual convergence of the two prices. (Futures price converges with the spot price on expiry).

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