Bitcoin Futures Basis Yields

Bitcoin futures basis yields are at seven-month highs, indicating a premium for holding futures compared to spot prices. This reflects strong bullish sentiment, as traders pay a premium to go long on bitcoin. However, high basis yields may also suggest a highly leveraged market, prompting analysts to warn of potential corrections if leverage unwinds.

QCP Capital analysts noted, "Perp funding is very elevated and basis yields are at 7-month highs. While we remain structurally bullish, we are cautious of any pullbacks, especially from leveraged washouts, as historically, such spikes in basis yields have not lasted very long." Bitcoin is currently hovering just below the critical $90,000 level, with the end-November basis surpassing 18%.

Bitcoin Options Traders Position for Further Upside

Despite concerns about possible pullbacks due to leveraged longs, QCP Capital analysts pointed out strong interest in the options market, particularly in call options for $110,000 and $120,000 strike prices. This trend indicates heightened demand for margin and leverage as investors prepare for further breakout potential.

Philipp Pieper, co-founder of Swarm Markets, noted that the recent bitcoin rally stems from capital waiting on the sidelines ahead of the U.S. election outcome. "This could lead to profit-taking in the medium term, causing price volatility since market ebullience isn't permanent," Pieper stated.

The GMCI 30, which tracks the top 30 cryptocurrencies by market cap, has risen 10.2% to 165.33. Bitcoin is trading at around $87,165, Ether has increased 4% to $3,306, and dogecoin surged 35% to $0.39, according to The Block's Prices Page.