CME BTC Futures Activity Hits 14-Month Low, Possibly Triggered by Basis Trade Ineffectiveness Leading to Institutional Fund Withdrawal

According to Odaily, the Bitcoin futures market at the Chicago Mercantile Exchange (CME) continues to weaken. Data shows that the average daily open interest (OI) for March 2026 has fallen below $80 billion, dropping further to around $72 billion in early April, marking the lowest level since February 2024. This represents the fifth consecutive month of decline. Additionally, the monthly trading volume for March decreased to $1.63 trillion, nearly halving from the peak in January 2025.

Market analysis indicates that this round of decline primarily stems from the large-scale unwinding of "basis trades." Previously, institutions drove the growth in CME positions by buying spot ETFs and shorting CME futures to capture spread profits. However, as Bitcoin's price retreated from a high of $120,000 to below $70,000, the annualized basis spread has significantly compressed. The current spread of approximately 5% is close to the risk-free rate of about 4.5%. After factoring in funding costs and counterparty risks, the arbitrage opportunity has essentially disappeared, prompting leveraged funds to withdraw. (The Block)