Market-Neutral Bets Yield 3x U.S. Treasury Notes, Bitcoin Gains Biggest Single Day Since October

Bitcoin gained 9.5% Wednesday, extending its two-day winning run. Analysts expect a six-figure rise in the following months. Glassnode reports 14% annualized return on market-neutral bitcoin cash and carry.

Charting site TradingView reported a 9.5% increase in Bitcoin {{BTC}} on Wednesday, the largest daily rise since Oct. 23. reached $64,000 on various markets, the most since November 2021. Due to Wall Street's adoption of spot-based bitcoin ETFs, the price has exploded from Monday's low at $51,500. The CoinDesk 20 Index, the market benchmark, rose almost 10% this week.

Prices will likely reach six digits in the coming months as the rise continues. Bitfinex analysts predicted a cautious price aim of $100,000-$120,000 by Q4 2024 and a cycle high in overall crypto market capitalization in 2025.

“ETFs have introduced ‘passive demand’ from price-agnostic investors. They view bitcoin as a store of value rather than a volatile asset, as they did before the ETFs, experts said. Early this week, technical analyst Peter Brandt predicted a $200,000 bitcoin top by September 2025.

These predictions will excite directional traders. Cash and carry arbitrage now yields three times more than the 10-year U.S. Treasury note, the risk-free rate, so non-directional traders are not left out.

Cash and carry arbitrage is a market-neutral approach that exploits spot and futures pricing differences. Because futures trade at a premium to spot prices, the arbitrageur has both long and short positions. As expiration approaches, the premium vanishes, and futures converge with spot prices on settlement day, giving the arbitrageur a risk-free return.

Glassnode says the bitcoin cash and carry approach using three-month futures earns over 14%. More than three times the 10-year Treasury yield of 4.27% and 2.8 times the 1-year Treasury yield of 5%.

Crypto markets may draw more money due to the greater yield. “Futures market yields may draw market makers back into digital assets, deepening market liquidity.

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